Problem

Restrictive share practices

Other Names:
Protective share structures
Incidence:

Companies throughout continental Europe are able to fend off hostile takeover bids by restricting the number of outstanding voting rights attached to shares, regardless of the volume of stock purchased by investors. Finance ministries can block bids by requiring positive approval of ownership of fixed percentages of shares, for example, 20% in France. Laws force shareholders with more than 10% of shares to declare their holdings. Some French companies limit the number of voting rights any one shareholder may possess. German companies refuse to register the shares of companies they regard as undesirable; unregistered shares carry no voting rights. Until recently, Sweden, Switzerland and Finland all denied foreign investors the access to voting shares that domestic investors had; Norway still does in 1993. In Scandinavia, the rationale behind protective share structures has been essentially nationalistic. In 1990, Sweden allowed foreign ownership of shares, but has the ability to draw distinction between "A" and "B" shares, with the "A" shares typically carrying 10 times the voting rights of the "B". Lastly, companies all around Continental Europe have the option of transforming themselves into "partnerships limited by shares"; the active partners, known in France as commandites, cannot be ejected by the passive shareholders, the commanditaires.

Problem Type:
E: Emanations of other problems
Date of last update
06.05.2019 – 19:45 CEST