Does every shareholder have voting rights?

Spring is nearly upon us – the season of annual meetings. When the minutes of the annual meeting or of a special or extraordinary general meeting are being prepared, a check should be made as to whether each shareholder or partner has voting rights,

as in certain cases the voting right may be suspended:

• If the company holds any of its own shares, the voting rights attached to those shares are suspended until they are disposed of or cancelled.
• If a share is held in joint ownership by several shareholders (for example through inheritance), the voting right may also be suspended by the company until a single owner is designated for the share for the purpose of dealings with the company.  The company’s articles of association often state that voting rights are automatically suspended until a joint proxy is appointed.
• If payment in full of shares which are not yet fully paid-up has been requested by the management body and no action has been taken, the voting rights attached to the shares in question are suspended.

It is therefore important to include two columns in the attendance list appended to the minutes of the general meeting:

1. One column for the number of shares
2. One column for the number of voting rights

It is also important to check in the company’s articles of association who has the voting right if a share is divided into bare ownership and usufruct. In most cases, the voting right lies with the usufructuary; in certain cases, however, such as for certain amendments to the articles of association, the bare owner is also entitled to vote.

In this case, also indicate clearly in the attendance list, which should show both the bare owner and the usufructuary, which of them can exercise the voting right.

If shares are pledged as security, the associated voting rights remain with the owner/pledgor in the absence of any stipulation to the contrary.

If shares are brought into a trust office, the voting rights are exercised by the management body of the administration office.  The certificate holders have no say in the running of the company, but must be invited to the general meeting.