European securities regulator launches call for evidence
“Empty voting” is the exercise of the voting rights attached to shares without having a corresponding economic interest. For example, shares can be borrowed and then voted. The borrower does not have a long-term economic interest in those shares as the shares will be returned to the original holder, usually in a short timeframe. The borrowing may be so that the borrower can take a short position, but may also be done simply to enable the borrower to exercise the voting rights.
Empty voting can arguably have negative consequences for corporate governance and for the transparency of company ownership. ESMA, the European securities regulator, has made a call for evidence – which can be read here – with the objective of collecting “information and evidence on the extent to which empty voting practices exist in practice within the EU and the effects of such practices”.
The call for evidence observes that there are currently no specific rules relating to empty voting at the European level. Two Member States (France and Portugal), however, have taken or are planning to take steps to address empty voting by establishing specific disclosure requirements regarding empty voting.
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