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Scale of corporations, industry-specificities and voting blocks: a private benefit
approach
I. Introduction
Christoph Van der Elst
Financial Law Institute
Ghent University, Belgium
The Directive on the information to be published when a major holding in a listed
company is acquired or disposed of or the major shareholdings directive (88/627/EEC)
enables a detailed analysis of the stake and the identity of the largest shareholders of
European stock listed corporations. In fact article 4 of the Directive states that Òwhere
a natural person or legal entity É acquires or disposes of a holdingÉ and where,
following that acquisition or disposal, the proportion of voting rights held by that
person or legal entity reaches, exceeds or falls below one of the thresholds of 10%,
20%, 1/3, 50% and 2/3, he shall notify the company and at the same time the
competent authority. É member States need not apply:
- the thresholds of 20% and 1/3 where they apply a single threshold of 25%,
- the threshold of 2/3 where they apply the threshold of 75%.Ó
The Directive is strict as to the attribution of voting rights. The natural person or legal
entity must determine the total number of voting rights held by other persons on
behalf of the former, by an undertaking controlled by that person or entity, by a third
party with whom that person or entity has concluded a written agreement which
obliges them to adopt a common policy towards the management of that company,
É 1
The European council stated that this policy of adequate information of investors is
likely to improve investor protection and to increase investorsÕ confidence.
This Directive urges voting blocks of 10% or larger to be disclosed. In most European
countries, and all countries in this paper, the legislator implemented lower thresholds.
In Belgium, France, Germany and Spain shareholders acquiring a stake of 5% or more
must disclose this stake; in the U.K. the first treshold is 3% and in Italy it is 2%.
Since the implementation of this Directive in the different EU-states it is possible to
undertake a more precise analysis of concentration of ownership and control of
corporations.
The European Corporate Governance Network studied in several European countries
the disclosed data. 2 They found that within Europe, the level of concentration of
1 See article 7 of the Directive. For a comment on the Directive see V. Edwards (1998).
2 For an overview of the different reports, see Becht, M., 2000, Corporate Control in Europe,
paper presented at the European Corporate Governance Forum, Brussels, 16 th November 2000,
33 p.
© Financial Law Institute 2001 1