F&C calls for removal of voting rights caps in France

Leading French companies such as Danone, Lafarge, Total and others have long limited shareholder voting rights in order to prevent any one shareholder from gaining significant control of the company.

However, F&C opposes voting caps as they breach the one share/one vote principle and insulate management from shareholders, thereby undermining accountability.
After several years of engaging fruitlessly with these companies to remove such caps, F&C began to turn up the pressure two years ago, by co-filing shareholder resolutions with fellow investors from France, the US and UK calling for their elimination. With the exception of Vivendi, who in 2005 voluntarily placed this issue on its ballot and enabled shareholders to vote out these caps, all of the companies have resisted efforts to change their stance, in some cases blocking efforts to put the issue to a vote.

This year, in partnership with French activist investor PhiTrust, F&C has succeeded in putting proposals to remove voting rights caps on the AGM agendas of Danone, Schneider Electric and Total. The resolutions have won the support of 29.1%, 33.7% and 54.9% of voting shareholders, respectively. French company law requires at least 66.66% of votes in favour in order for a proposal to be formally adopted, and all shareholder resolutions thus passed are binding on the company.

"Although none of the resolutions we have co-filed met the threshold required to force a change in company policy, these numbers are unprecedented for first-time resolutions, and even more stunning considering this is France, where this type of shareholder action is simply not in the local tradition. For over half of Total's shareholders to demand this change on the first try sends an unambiguous signals that France's number one company has got to play by global rules. We hope it will read the tea leaves and take appropriate action," said Karina Litvack, Director of Governance and Sustainable Investment at F&C.