Einde inhoudsopgave
The Decoupling of Voting and Economic Ownership (IVOR nr. 88) 2012/2.5.2
2.5.2 The Scope of the Actual Disclosure Obligation
mr. M.C. Schouten, datum 01-06-2012
- Datum
01-06-2012
- Auteur
mr. M.C. Schouten
- JCDI
JCDI:ADS593598:1
- Vakgebied(en)
Ondernemingsrecht / Rechtspersonenrecht
Voetnoten
Voetnoten
See eg section 5.38 (1) of the Dutch Financial Markets Supervision Act.
See eg the US Schedule 13-D, 17 CFR 240.13d-101.
Ibid.
The scope of French ownership disclosure mies, for example, has recently been expanded such that clarity on the purpose of acquisition needs to be provided more frequently, and that more information needs to be disclosed in this regard (Ordinance no 2009-105 of 30 January 2009). In the Netherlands, ownership disclosure mies are also likely to be amended such that shareholders need to indicate whether or not they agree with the company's strategy. See supra note 4. See also Mazars, supra note 71 at 140-143 and European Commission Staff Working Document, supra note 93 at 16.
See supra section 2.2.1.
See eg the US Schedule 13-D, 17 CFR 240.13d-101.
On the issue of empty voting, see, eg, H.T. Hu and B. Bleck, 'The New Vote Buying: Empty Voting and Hidden (Morphable) Ownership' (2006) 79 Southern California Law Review 811, 815, 816.
Accordingly, expanded disclosure requirements would not only reinforce the mechanism through which ownership disclosure improves market efficiency, but also the mechanism through which ownership disclosure improves corporate govemance; see Schouten, supra note 9 at 174, 175. This is the reason for which the Dutch govemment has recently proposed to require blockholders to also disclose gross short positions. Dutch Ministry of Finance, Voorstel wijziging Wft uitbreiding meldingsplicht substantiële zeggenschap- en kapitaalbelangen met economische long posities (2009), available at http://www.minfin.nl/Actueel/Consultaties/2009/09/Consultatie_Voorstel_wijzi-ging_Wft_ter_uitbreiding_meldingsplicht_substantiële_zeggenschap_en_kapitaalbelangen_met_economische_long_posities.
See Hu and Black, supra note 104 at 870.
See supra section 2.2.2.
Indeed, this is one of the reasons why the Dutch government has proposed that shareholders be required to indicate whether or not they agree with the company's strategy. See Dutch Ministry of Finance, supra note 105 at 4, 10.
UK Companies Act 2006, s. 793. In German law there is no right of the company to demand disclosure from persons who are interested in the company's shares. This may be surprising, as one may expect that a country with concentrated ownership is more inclined to provide company-triggered disclosure than a system with dispersed ownership, which may favour uniform disclosure standards. However, the German situation may be explained as follows: since shares are traditionally held directly by banks and other firms, the problem of fiduciary shareholding arises less often than in the UK or the US. Moreover, bearer shares are allowed and common; since the ownership of these shares may often not be known, German company law traditionally places less emphasis on the requirement of ownership disclosure than other legal systems. On the use of bearer and registered shares across countries, see Siems, supra note 20, at 137-145. For the question whether countries with dispersed ownership are more likely to have stringent ownership disclosure rules see also already supra section 2.4.2(a).
Charles M. Nathan, Second Generation Advance Notice Bylaws and Poison Pills (2009), available at http://blogs.law.harvard.edu/corpgov/2009/04/22/second-generation-advancenotice-bylaws-and-poisonpills/.
See supra note 4.
'Hedge funds threaten to guit UK over draft EU investment laws', The Financial Times, 4 June 2009; 'Draft EU hedge fund rules to be revised', The Financial Times, 28 July 2009; 'EU mles would see hedge funds go overseas' The Financial Times, 21 September 2009; 'Investors welcome revised EU fund mies', The Financial Times, 13 November 2009.
See supra note 83.
The other major aspect of ownership disclosure rules that affects their stringency concerns the scope of the actual disclosure obligation. This refers to the amount of information that needs to be disclosed once the disclosure obligation is triggered and the notification needs to be made. The two primary disclosure items are the identity of the acquirer and the number of voting rights acquired, typically expressed as a percentage of the total number of voting rights. Some countries, however, also require disclosure of, for example, the number of shares held,1 the purpose of acquisition,2 or related fmancial arrangements.3 Here too, concerns over hedge fund activism seem to be driving regulators towards expanding the scope of the actual disclosure obligation.4
The way in which countries can be expected to expand the scope of the actual disclosure obligation will depend on the specific functions of ownership disclosure they wish to reinforce. Suppose that a given country has a large population of firms that deviate from one share-one vote. If the regulator in that country is concerned with reinforcing the function of promoting market efficiency though accurate share prices,5 it may make sense to require that shareholders disclose, in addition to the number of voting rights held, the number and class of shares held. This way, the market is enabled to more accurately assess the incentives of the relevant blockholder, the likely agency costs deriving from the ownership structure and hence the implications for the value of the share.
For the same reason, regulators in some countries may require that shareholders disclose, in addition to the number of voting rights held, related financial arrangements.6 This could, at least to some extent, mitigate concerns about empty voting. Empty voting may occur for example when shareholders have hedged their economie exposure by way of equity derivatives.7 By requiring such shareholders to disclose related financial arrangements, the market, the issuer and regulators are alerted of the potential of empty voting.8 Of course, such disclosure requirements need to yield sufficiently specific information. In the case of Perry/Mylan, a famous (near-) instance of empty voting in the US, the disclosed information was opaque, and therefore of limited value in this respect.9
Alternatively, suppose that a regulator is concerned with reinforcing the function of promoting corporate governance by enabling communication between issuers and large shareholders.10 For such country, it may make sense to require shareholders to disclose the purpose of their acquisition.11 This way, issuers are enabled to reach out to dissenting blockholders at an early stage. Another way to facilitate communication between issuers and large shareholders is to enable issuers to identify such shareholders by granting them a statutory right to request extensive information from anyone the issuer believes to be interested in its shares, as it exists in the UK.12 The fact that issuers are keen on taking measures to obtain such information is also illustrated by the fact that in the US, many issuers have amended their bylaws calling for proxy contest proponents to include extensive information such as on whether and to what extent equity and voting interests are decoupled.13
As a final example, regulators concerned with reinforcing the function of promoting corporate governance by enabling monitoring of controlling shareholders' behaviour may require such shareholders to disclose additional information. This is illustrated by the European Commission's proposal for a directive on alternative investment fund managers, referred to in the Introduction.14 While it remains to be seen whether the proposal will be adopted, the opposition thus far has focused primarily on key issues such as restrictions on leverage and compensation.15 It may therefore well be that the proposed disclosure rules will be adopted, and that fund managers will be obliged to disclose, for example, a policy for preventing and managing conflicts of interests.
We do not suggest that the benefits of these examples of expanded ownership disclosure rules outweigh the costs.16 Rather, our point is that even though disclosure thresholds are unlikely to be lowered significantly in the future, as long as financial innovation and market practices continue to undermine transparency of major share ownership, we can expect ownership disclosure rules to evolve. This evolution is likely to take place along the lines set out in this section.