Iberia: A little democracy
On 17 June 2010, following a rough and eventful passage through Parliament, the Lower House of the Spanish Parliament finally approved a substantive amendment to Spanish corporations law (to article 105.2) affecting listed corporations: a prohibition on voting ceilings for a shareholder (or companies in the same group), regardless of the number of shares they own. To date, Spanish corporations law has allowed corporations (both listed and unlisted) to specify a voting ceiling in their bylaws for a shareholder or companies belonging to a group. This rule dates back to 1951 and the provision was originally intended as a mechanism to make shareholders' meetings more democratic. It was also supposed to provide a defence instrument for minority shareholders, by not allowing one shareholder to garner an excessive amount of power to control the company single-handedly, compelling the shareholders to reach agreements and adopt joint decisions with the other shareholders.
Plans to scrap Spanish-listed companies’ power to cap the voting rights of shareholders has ruffled feathers in the local business community. Fernando Vives Ruiz reports
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