French Parliament Debates Bill on Intermediaries

Washington, DC, January 9, 2001 - The French Parliament is debating a bill (non-official English translation) that would allow custodians to vote on behalf of beneficial shareholders. For French public companies that have owners not domiciled in France, an "intermediary" meeting certain requirements would be able to register to vote on behalf of these owners, subject to specific conditions. Under the bill, the registered intermediary would be required, at the request of the issuing company, to provide a list of non-resident owners of the shares. A failure to comply with the conditions, however, may result in a loss of voting rights and/or dividends for up to five years.

Recently in France, certain custodians holding assets for Institute members have been refusing to sign proxy statements and vote on behalf of members. The custodians are concerned that, if they are considered beneficial owners, they would risk sanctions provided in French law for misrepresentation or may need to make disclosures of significant shareholdings. The Institute noted this problem in its global corporate governance survey and has raised the issue with the staff of French associations representing asset managers and issuing companies.