3. The rights of shareholders and key ownership functions

All jurisdictions covered by the Factbook require companies to provide advance notice of general shareholder meetings, with 51% establishing a minimum notice period ranging between 15 and 21 days, while another 39% provide for longer notice periods and 10% for shorter periods.

Participation in general shareholder meetings is considered a fundamental shareholder right. The G20/OECD Principles of Corporate Governance provide in sub-Principle II.C.1 that “Shareholders should be furnished with sufficient and timely information concerning the date, format, location and agenda of general meetings, as well as fully detailed and timely information regarding the issues to be decided at the meeting” (OECD, 2023[1]). Overall, to ensure that shareholders receive information on general shareholder meetings with sufficient advance notice, the corporate frameworks of all surveyed jurisdictions provide for dates and methods of notification.

The minimum period of notification of the meeting varies, with a majority of jurisdictions (25) requiring between 15 and 21 days. Having a notice period between 15 and 21 days was also the most widely adopted period in 2015 with 21 jurisdictions. Since 2015, more jurisdictions have amended their frameworks to guarantee longer notice periods. However, only two jurisdictions lengthened their notice periods during the last two years: Brazil extended the notice period from 15 to 21 days while Iceland extended this period from 14 to 21 days. On the other hand, Chile decided in 2020 to reduce the notice period from 20 to 10 days. The EU Shareholders’ Rights Directive (Directive 2007/36/EC) requires a period of at least 21 days for general shareholder meetings, unless the company has electronic voting and a shorter notice period was approved at the previous general meeting by a majority of not less than two-thirds of the voting shareholders, in which case a company may call a general meeting – other than its annual general meeting – providing at least a 14-day notice.

Nineteen of the Factbook jurisdictions have mandatory notice periods above 21 days, while only 5 have notice periods below 15 days (Chile, Japan, Korea, New Zealand and Singapore) (Table 3.1, Figure 3.1).

Proxy materials are generally sent to shareholders at the same time or a few days after the notification is given. In addition, in some jurisdictions, voluntary code recommendations are used as a way of supporting longer notice periods. For instance, Colombia’s code recommends a notice period of 30 days, twice as long as the statutory 15-day notice period, while Hong Kong (China) provides in its code for 20 business days (at least four weeks) instead of the statutory 21-day minimum. Conversely, in India, shareholders may approve a shorter notice period in some cases. Further, in Italy, the minimum period may vary depending on the item on the agenda, whereby 40 days are required in case of board renewal, and 21 days in specific cases such as the reduction of share capital. In some jurisdictions, shareholders with a certain shareholding (e.g. 10% in Mexico, one-third in Italy) can request to postpone the voting on any matter for three to five days if they consider that they have not been sufficiently informed.

More than 70% of surveyed jurisdictions (35) have a provision requiring notices of general shareholder meetings to be sent directly to all shareholders, a 14% increase since 2015. In 2021-22, Slovenia established this requirement while Poland abolished it. Furthermore, almost all jurisdictions require multiple methods of notification which in addition to direct notification may also include use of a stock exchange or regulator’s electronic platform, and publication on the company’s website or in a newspaper (Table 3.1, Figure 3.2). For example, in Latvia, the notification for general meetings must be made through publication in the official electronic system (Central Storage of Regulated Information – ORICGS). In Türkiye, the notification and relevant documents are published in the Turkish Trade Registry Gazette, on the registered website of the company and on the Public Disclosure Platform (PDP), an electronic system and website currently operated by the Central Securities Depository of Türkiye to provide the notifications submitted and publicly disclosed by listed companies and other capital market entities.

Minority shareholder rights to engage by requesting extraordinary shareholder meetings or placing items on the agenda of the general meeting are commonly granted in surveyed jurisdictions. Overall, all but eight of the Factbook jurisdictions have set deadlines for convening special meetings at the request of shareholders, subject to specific ownership thresholds which vary from as low as 1% to a maximum of 25%. Most jurisdictions specify lower ownership thresholds for placing items on the agenda of the general meeting to enable discussions on topics deemed relevant by minority shareholders.

The ability for shareholders to request the convening of an extraordinary meeting and to place items on the agenda of the general meeting affects the degree of minority shareholders’ participation in companies’ discussions and decisions. Regarding a shareholder’s right to request a shareholder meeting, 84% of jurisdictions require that the meeting takes place within a specific time period after the shareholder’s request (Table 3.2, Figure 3.3). The most common minimum time period is between 31 and 60 days (20 jurisdictions). Two jurisdictions allow for longer periods: Finland sets a three-week minimum and a three-month maximum and Latvia has a three-month period requirement. Conversely, 6 jurisdictions have shorter time limits of 15 days or less (Austria, the People’s Republic of China (hereafter ‘China’), Ireland, Mexico, Peru, and Poland).

Eight of the Factbook jurisdictions do not have a specific deadline for requesting a shareholder meeting (although in Korea there is a non-specific requirement for “prompt” notification). Italy is considered to have a set timeframe for convening extraordinary meetings, based on a provision which requires the meeting to be convened “without delay” and on courts’ interpretation of this provision, which has established 30 days as a fair term to call a meeting. Further, while Switzerland also has not established a specific deadline, shareholders may require a court to order that a general meeting be convened if the board of directors does not grant such a request within a reasonable time.

In other jurisdictions, courts or competent authorities may be involved in the process to ensure that shareholders’ rights are protected or exercised in good faith and not abused. Some jurisdictions allow shareholders to convene the meeting by themselves if no action is taken by management, although the expense of calling and holding the meeting is then paid by the shareholders (e.g. Australia). In Saudi Arabia, on the other hand, if the board does not issue the invitation for the general assembly within 30 days from the date of a shareholders’ request, shareholders representing 10% of the capital can request the competent authority to invite the general assembly, and the competent authority should issue the invitation for the general assembly.

Concerning the ownership threshold to request a meeting, all Factbook jurisdictions require that such requests be supported by shareholders holding a minimum percentage of shares or voting rights. The most common minimum threshold is 5%, established in approximately half of surveyed jurisdictions, while another 37% of jurisdictions set the threshold at 10%. Colombia and Hungary have lowered their thresholds to 10% and 1%, respectively, since 2020. Some jurisdictions (Brazil and the Czech Republic under certain conditions, as well as Japan, Korea and Portugal) have set thresholds below 5% to make it easier for shareholders to call extraordinary meetings. Costa Rica and Peru currently set a considerably higher threshold of 25% and 20%, respectively (Figure 3.4).

Often, the legal framework sets lower ownership thresholds to allow shareholders to request the addition of items to a meeting’s agenda (Figure 3.4). More than 40% of surveyed jurisdictions either have no threshold or a low threshold in the range of 0.1 to 2.5% for the addition of items to the agenda. Notably, New Zealand and Norway only require having one share, and South Africa does not set a threshold but allows any two shareholders to request an item to be added. In the United States, the SEC recently introduced a new and unique regime based on continued ownership for adding items to the agenda, which entered into force in January 2022. To exercise this right, a continuous ownership of at least (i) USD 2000 of the company’s securities for at least three years; (ii) USD 15 000 of the company’s securities for at least two years; or (iii) USD 25 000 of the company’s securities for at least one year is required. Switzerland also recently amended its framework and now requires a very low threshold equal to at least 0.5% of shares, rather than a monetary threshold as under its previous regime. The most common minimum threshold for placing items on the agenda remains set at 5%, identical to that for requesting an extraordinary meeting, and is established in 19 jurisdictions, sometimes with some cumulative (e.g. 5% and three-month holding in Austria) or alternative requirements (such as in the United Kingdom, where the threshold is either at 5% or requires 100 shareholders who together own more than GBP 10 000 of shares). Only seven jurisdictions set minimum thresholds above 5%, with Colombia setting the highest legally required minimum threshold of 50% plus one vote.

Almost all Factbook jurisdictions allow companies to issue shares with limited voting rights and only a few of them limit them to a certain percentage of the share capital. A growing number, more than half of jurisdictions, also allow the issuance of shares with multiple voting rights.

The G20/OECD Principles recommend that shareholders should have the right to engage in general meetings by participating and voting, and also foresee the possibility of having different classes of shares with different rights attached, for example shares with limited voting rights or preference shares which give right to a preference concerning a firm’s dividends. When there are different classes of shares, the G20/OECD Principles underline that within the same series of a class, all shareholders should be treated in equal manner (Principle II.E).

In practice, only Indonesia and Israel prohibit listed companies from issuing shares with limited voting rights. Among those that allow such shares, seven have further restrictions as, while allowed, they may not represent more than a certain percentage of the share capital, ranging most commonly from 25% (in Korea and Mexico) to 50% (Brazil, Italy, Japan), or, as in Australia, they are only allowed for preference securities (Table 3.3).

Most jurisdictions (44) allow the issuance of shares without voting rights that grant preference with respect to dividends, so called “preferred” or “preference” shares. Of these jurisdictions, more than a third (15 out of 44) allow these shares subject to some limitations. For example, in Colombia they are allowed up to 50% of the share capital, and in the Czech Republic up to 90%. Overall, there is an upward trend in jurisdictions allowing shares with preferential rights to dividends, as 30 did so in 2015 (with eight of them imposing some limits to their issuance). On the other hand, legal frameworks are overall more stringent concerning the issuance of shares without voting and without preferential dividend rights, with a total of 13 jurisdictions prohibiting such type of shares (Figure 3.5).

In recent years, there has been a significant increase in Factbook jurisdictions that allow companies to issue multiple voting shares, deviating from the concept of “one share one vote”.

Among the Factbook jurisdictions, 55% allow shares with multiple voting rights in their legal framework and 31% of jurisdictions explicitly prohibit them (Table 3.3). Since 2021, when multiple voting right shares were allowed in 44% of jurisdictions and explicitly prohibited in 40%, five jurisdictions have amended their laws to allow companies to issue this type of shares – namely, Brazil, Indonesia, Latvia, Portugal, and Spain. In Portugal, for example, the Portuguese Securities Code was amended by Law No. 99-A/2021 and the legal framework introducing plural voting shares for listed companies entered into force on 30 January 2022. In Brazil, Law No. 14.195 of 26 August 2021 introduced plural voting shares and specifies that for the issuance of shares with plural voting rights, the decision shall be approved by shareholders representing at least half of the shares with voting rights; and at least half of the preferred shares without voting rights or with restricted voting rights, if issued, gathered at a specially convened meeting.

The growing number of jurisdictions revising their framework to grant companies the option of issuing shares with multiple voting rights goes in the same direction as a recent proposal contained in the European Listing Act. The proposed EU Directive on multiple-vote shares for SME listings, under discussion in the European Parliament, aims to encourage companies to list by allowing multiple voting share structures while safeguarding the interests of the company and of other shareholders.1 The Directive currently targets firms that seek to list on SME growth market segments to harmonise an area of law in which Member States have often taken differing positions.

Some jurisdictions regulate other control enhancing mechanisms such as so called loyalty shares, which are often considered a tool to curb corporate short-termism and promote long-term engagement of shareholders. France is one of the jurisdictions that automatically grants double voting rights for shares held for at least two years by the same person, provided that the company does not opt out by prohibiting double-voting rights in its bylaws, following a two-thirds majority vote in a general shareholder meeting. Spain introduced a loyalty shares system in 2021 that allows companies to provide double voting rights for certain shareholders.

Lastly, voting caps, whereby a company limits the number of votes that a single shareholder may cast, are permitted in approximately half of the jurisdictions (24) and prohibited in 13 jurisdictions.

A growing majority of jurisdictions require listed companies to publish voting results promptly (within five days) after the general meeting, and to prescribe a formal procedure of vote counting.

Disclosure of the outcome of voting decisions for each agenda item is required in all surveyed jurisdictions except New Zealand. Timing requirements for disclosure are also becoming shorter, with 63% of jurisdictions now requiring disclosure immediately or within five days (Figure 3.6), a substantial increase from the 39% that did so in 2015. In most jurisdictions, the legal framework also requires that companies disclose the outcome as well as the number of votes expressed in favour or against a decision, including abstentions. Formal procedures for vote counting are also common among jurisdictions: 69% of jurisdictions have a formal procedure of vote counting (up from 49% in 2015) (Table 3.4).

In the last few years, as a result of restrictions imposed during the COVID-19 pandemic and of the shifting preferences of companies and shareholders, the manner for holding shareholder meetings has evolved. This evolution is captured in the legal framework of the Factbook jurisdictions, a large majority of which now allow and provide for virtual and/or hybrid meetings in their legal framework.

The G20/OECD Principles of Corporate Governance, as revised in 2023, include a new recommendation that acknowledge the growing relevance of remote participation in meetings as well as the need for legal frameworks to ensure equal access to information and opportunities for participation of all shareholders, regardless of how shareholder meetings are conducted. The new sub-Principle II.C.3 provides that General shareholder meetings allowing for remote shareholder participation should be permitted by jurisdictions as a means to facilitate and reduce the costs to shareholders of participation and engagement. Such meetings should be conducted in a manner that ensures equal access to information and opportunities for participation of all shareholders.”

As of the end of 2022, virtual meetings (where all shareholders attend the meeting virtually) are allowed and regulated in approximately three-quarters of the surveyed jurisdictions (37). Hybrid meetings (where some shareholders attend the meeting physically and others virtually) are allowed in an even higher number of surveyed jurisdictions, with more than 80% having a provision in their laws or listing rules addressing hybrid meetings (Table 3.5, Figure 3.7).

These figures reveal a profound change in company practices and legal frameworks that go beyond the temporary measures adopted as a response to the COVID-19 pandemic (Denis and Blume, 2021[2]; OECD, 2020[3]). Interestingly, while some jurisdictions already had measures in place for remote meetings well before the outbreak, an example being New Zealand which adopted measures on virtual shareholder meetings in its 2012 Companies Act, the pandemic and practices put in place by companies to deal with it have given authorities the opportunity to update their legal frameworks with regards to remote participation in shareholder meetings and to adopt permanent provisions. Some jurisdictions, such as Ireland and Italy, have leveraged legislation enacted during the pandemic that allowed virtual and hybrid meetings by extending these temporary measures.

Importantly, the possibility of holding virtual or hybrid meetings is often at each company’s discretion and subject to specific provisions in the company’s articles of association or bylaws. While this raised concerns during the pandemic and prompted specific emergency legislation to address the situation and exceptionally allow remote meetings without specific company provisions (OECD, 2021[4]; World Bank Group, 2021[5]), over 40% of jurisdictions still require a provision in the articles of association or company bylaws to hold a virtual meeting and 35% require it to hold a hybrid meeting (Figure 3.7). Canada, for example, allows hybrid meetings by law but requires a specific provision in the company founding documents for a virtual meeting. Denmark, Finland, Iceland, Japan, Latvia and Lithuania require a provision in the company documents only for fully virtual meetings and not for hybrid ones, whereas Italy, Slovenia and Sweden require a provision for hybrid meetings, as their legal framework allows and regulates only hybrid meetings. Germany, in addition to requiring a provision in the company’s articles of association, also imposes a time limit on the authorisation for holding virtual meetings, limiting it to a maximum of five years and requiring a new shareholder approval after five years.

Regarding the jurisdictions that impose some limitations on remote participation in shareholder meetings, China and Türkiye do not allow fully virtual meetings and only regulate hybrid meetings. Some other jurisdictions that did not have a framework for remote meetings in place as of the end of 2022 have more recently adopted one (Hong Kong (China)) or are planning to pass ad hoc provisions in the coming months (the Netherlands), which shows that legal frameworks continue to evolve to best capture company and investor preferences while upholding shareholder protections and ensuring their ability to effectively participate remotely in shareholder meetings.

The manner in which shareholder meetings are conducted should not come at the expense of shareholder engagement. New sub-Principle II.C.3 of the G20/OECD Principles of Corporate Governance states that “due care is required to ensure that remote meetings do not decrease the possibility for shareholders to engage with and ask questions to boards and management in comparison to physical meetings. Some jurisdictions have issued guidance to facilitate the conduct of remote meetings, including for handling shareholder questions, responses and their disclosure, with the objective of ensuring transparent consideration of questions by boards and management, including how questions are collected, combined, answered and disclosed. Such guidance may also address how to deal with technological disruptions that may impede virtual access to meetings.”

More than 70% of the Factbook jurisdictions have laws, regulations or recommendations in their corporate governance codes to promote equal participation of all shareholders (Table 3.5). Finland, for example, has an explicit provision stating that shareholders participating remotely in a virtual or hybrid meeting must have the same participation rights as in a physical meeting, and the legal framework goes further by addressing how technical disruptions may impact the validity of decisions taken during remote meetings and under what conditions a meeting should be interrupted and reconvened. Other jurisdictions include specific safeguards to guarantee shareholders’ identity (Chile and Hungary, for example) or specify that the technology used should allow for two-way real-time communication or other similar electronic means that can allow a shareholder that participates remotely to follow, speak and vote at the meeting on any resolutions that have been tabled (Estonia). Similar safeguards on electronic communications are also provided for in India, Luxembourg and South Africa. Switzerland provides a unique safeguard for the conduct of remote meetings, by allowing them only if an independent voting representative has been designated. These examples demonstrate the growing importance of the issue, as addressed in the revised Principles. Nevertheless, 12 jurisdictions that allow for remote participation in shareholder meetings still do not specifically address the need for ensuring equal participation in their legal framework.

New sub-Principle II.C.3 also recognises the role codes of conduct may have in providing guidance and ensuring proper engagement and equal treatment of shareholders during remote meetings. This is not yet a widespread practice, having been established in less than a quarter of jurisdictions. These jurisdictions either require or recommend the adoption of a code of conduct at the jurisdiction’s level (for example, adoption of a code is required by law in Brazil and recommended in Israel and Singapore). Less than 20% of jurisdictions rely on codes of conduct at the company level in addition or as an alternative to codes of conduct at the jurisdiction level. Among these, four jurisdictions, China, Indonesia, Saudi Arabia, and Spain, have codes of conducts at both the company and jurisdiction level (Table 3.5). Argentina is an example of a country relying solely on companies to establish their own procedures for remote meetings, including those related to shareholder voting rights and participation.

While regulatory frameworks are evolving, there is also a larger debate across jurisdictions on how to best ensure equal and effective shareholder participation in the different meeting formats, as well as on how to better serve different investor preferences. If, on one hand, it is well recognised that remote meetings can have positive spillover effects on engagement by facilitating attendance and reducing costs for investors to participate, on the other hand, some jurisdictions and companies also report that some investors prefer in-person participation and voting by proxies, which highlight the need to ensure the possibility of attending meetings in person, even if providing both options imply extra costs (Magnus and Blume, 2022[6]). This debate means that jurisdictions are currently striving to find the most appropriate balance between whether companies should be required to allow shareholders to attend meetings in person under hybrid formats, or whether it should be left to the company to decide on whether its shareholder meetings should be conducted fully in person, in a hybrid format, or fully remotely.

Related party transactions and conflicts of interest pose risks and are therefore a recurrent feature in the legal and regulatory frameworks of Factbook jurisdictions, which address their complexity through a combination of targeted measures concerning immediate and periodic disclosure as well as approval processes by boards and/or shareholders.

While related party transactions may involve certain efficiency gains for companies, the conflicts of interest inherent in such transactions can increase risks related to the mismanagement and misuse of corporate assets and to the equal treatment of all shareholders. In this context, regulatory frameworks can provide safeguards to help ensure that related party transactions are duly monitored and carried out in the company’s and shareholders’ interests under appropriate conditions. For these reasons, related party transactions are generally not prohibited, with some relatively rare exceptions, such as certain transactions involving loans between a company and its directors.

Otherwise, jurisdictions prefer to place safeguards to ensure that related party transactions are duly considered and evaluated, through independent and external reviews and through multiple layers of approvals which generally exclude or seek to minimise the influence of directors and/or shareholders who bear a conflict of interest. The G20/OECD Principles address related party transactions in Chapter II, acknowledging how such transactions can pose risks for shareholder rights, particularly minority shareholders. Principle II.F states that “related party transactions should be approved and conducted in a manner that ensures proper management of conflicts of interest and protects the interests of the company and its shareholders.”

Sub-Principle II.F.1 states that an effective framework for clearly flagging these transactions entails that clear definitions of a related party should be provided. All jurisdictions surveyed include definitions of what constitutes a related party in their company law, securities law or securities regulation, as well as corporate governance codes, while a few jurisdictions also reference their accounting laws or standards as relevant (Table 3.6).

Disclosure of related party transactions is among the most common safeguards across surveyed jurisdictions, usually involving a combination of both immediate and periodic disclosure requirements in company annual financial statements in order to provide investors with timely and accurate information on such transactions. Requirements for immediate disclosure have substantially increased in recent years and are in effect in all but six of the surveyed jurisdictions, while periodic disclosure is now established for all jurisdictions.

Nearly all jurisdictions, growing year by year, now require immediate disclosure of material related party transactions in addition to their reporting in annual financial statements. A wave of reforms has been driven by the requirement to transpose the EU Shareholder Rights Directive 2017/828 (SRD II) among EU Member countries. The SRD II mandated that EU Member States implement requirements for companies to disclose material related party transactions with detailed information related to them when the transaction is concluded. The Directive allowed some flexibility for companies to set criteria for the materiality of such transactions, while requiring that these criteria include one or more quantitative ratios based on the impact of the transaction on the financial position, revenues, assets, capitalisation, including equity, or turnover of the company, or that it takes into account the nature of the transaction and the position of the related party. Nevertheless, the pace of reforms in this area goes beyond the impact of the SRD II among EU Member States, as there are currently 88% of surveyed jurisdictions that require immediate disclosure – a notable increase compared to data in 2017 when only about half of jurisdictions required immediate disclosure for significant related party transactions.

Jurisdictions reported some variations in what constitutes immediate disclosure. For some, this imposes a real-time and prompt disclosure obligation, while for others it is required within a few days of the transaction. In Hungary, for example, listed companies are to publicly announce material transactions with related parties on their website at the latest at the time of the conclusion of the transaction. Similarly, in Malaysia non-recurrent related party transactions not falling within a specific exception have to be disclosed as soon as possible, after the terms of the transaction have been agreed. In Brazil, immediate disclosure is considered satisfied within seven business days (Table 3.7).

Jurisdictions’ approaches and the information required to be disclosed when a material related party transaction is concluded vary substantially, but the common denominator across jurisdictions is that information to be publicly disclosed should allow shareholders to determine whether the transaction is fair and has been concluded at market price. In Belgium, for example, as in other EU Member countries, the Code on Companies and Associations provides that related party transactions are subject to a public announcement, at the latest when the decision is made or the transaction is concluded. Public disclosure should include at least (i) information on the nature of the relationship with the related party; (ii) the name of the related party; (iii) the date and the value of the transaction; and (iv) any other information necessary to assess whether the transaction is fair and reasonable from the point of view of the company and its non-related shareholders, including minority shareholders. In Japan, listed companies must immediately disclose a summary of the issues decided, future prospects, and other matters that are deemed to have material significance on investment decisions, including specifics on the conflict of interest.

All jurisdictions require reporting of related party transactions involving directors, senior executives, controlling shareholders or other large shareholders in annual financial statements, with jurisdictions following either International Accounting Standards (IAS24) or a local standard similar to IAS24 (Figure 3.8). The percentage of jurisdictions adopting IAS24 gradually increased from 71% in 2015 to 82% in 2018 and 84% in 2022.

The approval process for related party transactions is key to ensure they are concluded on an arm’s length basis. Requirements for board approval of certain transactions have become widespread, with some variations in how such reviews are carried out. Specific safeguards include requirements for abstention from voting of the interested parties, review by independent board members and committees, and opinions from outside specialists as well as, ultimately, shareholder approval for certain transactions.

The approval process and combination of safeguards is specific to each jurisdiction, with some common features across EU Member countries due to the SRD II. There is, however, an increasing trend among jurisdictions to adopt more safeguards when it comes to related party transactions, especially those considered material and outside the ordinary course of business.

The number of Factbook jurisdictions requiring board approval of certain related party transactions has grown substantially. All but eight jurisdictions (84%) require it compared to 59% in 2017 and 54% in 2015. Further, in some jurisdictions, although not expressly required, board approval still occurs and derives from directors’ fiduciary duties (Brazil and Switzerland). Requiring that related board members abstain from approving the transaction is also a more common practice, now explicitly required in 80% of jurisdictions (39), a continued increase since 2018 (50%) and 2015 (30%) (Figure 3.9).

Another common safeguard is provided by the involvement, in various forms, of independent members of the board or of the audit committee (e.g. in Argentina, Malaysia and Portugal). A review by these members, is required in 22 jurisdictions, and recommended or optional in six, a practice which is becoming more common, as in 2015 independent board members were required or recommended to have a role in the approval process in just 11 and three jurisdictions, respectively. An additional safeguard can be established to require or recommend that an auditor or other outside specialist provides an opinion on the fairness of the transaction. While a few more jurisdictions have established provisions concerning auditor or outside specialist opinions, the numbers remain relatively low, with only 11 jurisdictions requiring an opinion, four recommending one, and ten additional jurisdictions having such practice as optional (Table 3.8).

Shareholders are called to approve related party transactions in addition to or as an alternative to board approval in the majority of jurisdictions covered by the Factbook. This is mostly the case when related party transactions are above certain thresholds or not on market terms.

Shareholder approval is a mechanism established in 59% of surveyed jurisdictions and is generally triggered by specific conditions set out in the legal framework. Often, it is required when the related party transaction at issue is large, representing more than 5% or 10% of a company’s total assets or other criteria, while in other cases it is prompted by non-approval by independent board members (like in Türkiye). In Colombia, Greece, Latvia, the Netherlands, Peru, and Saudi Arabia, shareholder approval is required for cases involving board member conflicts of interest, with some differences between these frameworks. In other jurisdictions, there are multiple criteria that require shareholder approval (Table 3.9, Figure 3.10).

About half of the jurisdictions that require shareholder approval specify some additional requirements in terms of the approval required, often in the form of approval by non-interested shareholders or qualified majorities.

Fifteen jurisdictions require minority approval at least in certain cases, one jurisdiction (Chile) requires two-thirds majority approval, and six – while requiring a simple majority – preclude shareholders that are related parties from participating in the vote. In addition, Slovenia requires both a qualified majority of three-fourths and also precludes related parties from voting. Obtaining an opinion or evaluation from external auditors is a precondition for shareholder approval in eight jurisdictions, while 17 jurisdictions require an opinion from an outside specialist (Figure 3.10).

In framing mandatory takeover bid rules, four-fifths of jurisdictions take an ex-post approach.

Nearly all jurisdictions have regulations for takeover bids, but some allow for flexibility. For example, Switzerland’s law calls for a mandatory takeover bid to be triggered above 33 and one- third threshold of voting rights, but also allows individual companies to repeal the requirement or increase the threshold up to 49%. Hong Kong (China) addresses the issues in codes which are non-statutory in nature, but companies are required to fully comply with the codes. The United States is a notable exception in not imposing a requirement that a bidder conduct a mandatory tender offer, leaving it to the bidder’s discretion as to whether to approach shareholders (Table 3.10). Among the 48 jurisdictions that have introduced a mandatory takeover provision, 39 take an ex-post approach, where a bidder is required to initiate a takeover bid after acquiring shares exceeding the threshold (i.e. after the control shift). The remaining nine jurisdictions take an ex-ante approach, where a bidder is required to initiative a takeover bid for acquiring shares which would exceed the threshold. These figures have not shifted substantially since 2015.

Approximately half of all jurisdictions establish multiple thresholds that can trigger takeover bid requirements. Approximately half have also established minimum thresholds of between 30-33%, where the calculation regularly includes all affiliated parties in the sum. Many of these jurisdictions have strict additional triggers for small increments above the minimum threshold. The smallest such increments range from 0.05% in Ireland to slightly larger increments in Singapore (1%), Hong Kong (China) and Malaysia (2%) and Greece (3%), while Colombia, India and Italy impose triggers for every 5% increase above the minimum.

Chile, with a two-thirds threshold, and New Zealand, which imposes a trigger for a mandatory bid at 90%, impose some of the least restrictive triggers. Several jurisdictions have established triggers at 50% or higher (Figure 3.11, Panel A), but in several cases (Argentina, Estonia, Indonesia, and Türkiye), these jurisdictions also impose a trigger if the shareholder or associated shareholders are able to control the appointment of a majority of the board, which typically can be achieved at a percentage well below 50%. The Czech Republic, Mexico and Spain also have a trigger of control over the company or board if this occurs at a level below the triggering quantitative threshold of 30%. At the other extreme, in two jurisdictions with ex-ante frameworks (Japan and Korea), acquisition of 5% of voting rights from a substantial number of shareholders within a certain period is prescribed as a trigger for tender offers.

In Italy, the law differentiates the mandatory triggering threshold according to the size of companies, where small and medium sized enterprises (SMEs) may establish in the bylaws a threshold in the range of 25-40% of voting rights, while for the others the threshold is 25% of voting rights provided that no other shareholder holds a higher stake.

Mechanisms to determine the minimum bidding price have been established in 88% of jurisdictions with mandatory takeover bid rules (Figure 3.11, Panel B). The minimum bidding price is most often determined by: a) the highest price paid by the offeror (3-12 months); b) the average market price (within 1-12 months); or a combination of the two (Table 3.10). Nevertheless, there are other mechanisms used less often, particularly in situations involving illiquid stocks, such as the price fixed by an appraiser firm (Costa Rica), taking into consideration book value (India) or value based on net assets divided by number of shares (Latvia and the Slovak Republic). Several jurisdictions have a mechanism for calculating the price by external experts under certain conditions (Peru, Portugal, and the Slovak Republic). Six jurisdictions, while having mandatory takeover bid rules, do not impose requirements for the minimum bidding price.

Over the last decade, many OECD countries have experienced increases in institutional ownership of publicly listed companies. Significant discrepancies remain, however, with regard to the ability and incentives of institutional investors to engage in corporate governance.

The share of equity investments held by institutional investors such as mutual funds, pension funds, insurance companies and hedge funds has increased significantly over the last decade. According to OECD research covering almost 31 000 listed companies in 100 different markets, institutional investors held 44% of global market capitalisation at the end of 2022 (Chapter 1). These are mainly profit-maximising intermediaries that invest on behalf of their ultimate beneficiaries. The most important ones are mutual funds, pension funds and insurance companies. Institutional investors differ widely, including with respect to their ability to engage in corporate governance and interest in doing so. For some institutions, engagement in corporate governance is a natural part of their business model, while others may offer their clients a business model and investment strategy that does not include or motivate spending resources on active ownership engagement. Others may engage on a more selective basis, depending on the issue at stake (Isaksson and Çelik, 2013[7]). The G20/OECD Principles of Corporate Governance as revised in 2023 suggest that the corporate governance framework should facilitate and support institutional investors’ engagement with their investee companies (Principle III.A.).

Many jurisdictions impose requirements for different types of institutional investors, and voluntary codes are also becoming increasingly common.

Rather than providing overarching corporate governance requirements, many jurisdictions impose different requirements for different types of institutional investors, such as pension funds, insurance funds or asset fund managers. Some countries also provide more stringent requirements for institutional investors with significant shares (of the assets under management) in their domestic markets. Stewardship codes have become increasingly common and may offer a complementary mechanism to encourage such engagement (Principle III.A of the G20/OECD Principles).

The G20/OECD Principles note that the effectiveness and credibility of the corporate governance framework and company oversight could depend in part on institutional investors’ willingness and ability to make informed use of their shareholder rights and effectively exercise their ownership functions in their investee companies. However, if the institutional investors controlling the most significant number of shares in the market are foreign-based, requirements for enhancing corporate governance practices (e.g. managing conflict of interests with investee companies, monitoring the investee companies) may not be very effective if they only apply to domestic institutional investors. In this context, many jurisdictions are paying increasing attention to voluntary initiatives such as “comply or explain” stewardship codes which both foreign and domestic institutional investors can commit to follow. By the end of 2021, at least 22 jurisdictions had adopted stewardship codes in some form (Fukami, Blume and Magnusson, 2022[8]). Spain recently issued a voluntary stewardship code open to foreign investors, outlining seven principles (CNMV, 2023[9]). Signatories are required to explain in their annual report the extent to which these principles have been complied with or diverged from and why. Table 3.11, shows that investor stewardship codes or other guidelines promoted either by public authorities or industry association(s) (such as in Singapore) are becoming increasingly common.

Some jurisdictions oblige or encourage institutional investors to exercise their voting rights.

Several jurisdictions set forth legal requirements regarding the exercise of voting rights by some types of institutional investors. In the United States, for example, corporate pension funds are obligated to exercise their voting rights and vote their shares (OECD, 2011[10]). In Israel, institutional investors (including fund managers, pension funds, provident funds and insurance companies) must participate and vote on certain resolutions. Switzerland implemented the Ordinance against Excessive Compensation in 2014, requiring pension fund schemes to vote in the interest of their insured persons on specific matters, such as election of the members of the board of directors and compensation committee, and compensation to the board of directors and executive management.

On the other hand, some jurisdictions impose constraints on institutional investor voting. For example, in Sweden, AP7, one of the state-owned pension funds, which manages pension savings for more than 4 million Swedes, is, as a main rule, prohibited from voting its shares in Swedish companies, unlike the other pension funds (AP1-4).

Following the implementation of the EU SRD II, there has been a major increase in the number of jurisdictions requiring or recommending that institutional investors disclose voting policies and voting records.

The EU SRD II requires Member States to ensure that institutional investors and asset managers develop a policy on shareholder engagement, make the policy publicly available, disclose how they have implemented the policy and report annually on how they have voted at general meetings, including a general description of voting behaviour, an explanation of the most significant votes and the use of the services of proxy advisors, making this information available free of charge on their websites.

All but six out of 49 surveyed jurisdictions now require or recommend that some institutional investors disclose their voting policies. Figure 3.12 shows that 32 jurisdictions either have a legal requirement or a combination of legal requirements and code recommendations related to disclosure of voting policy, while ten jurisdictions rely solely upon code recommendations, and one jurisdiction establishes both code and self-regulatory requirements by industry association(s).

Although requirements or recommendations to disclose actual voting records have increased significantly from 34% in 2015 to 67% in 2022, they remain less common than voting policy disclosure. Twenty-five jurisdictions have legal requirements for such disclosure including six that have both legal requirements and code recommendations. While an additional eight jurisdictions recommend such disclosure in voluntary codes, a steadily declining number of jurisdictions (33%) have neither code recommendations nor legal requirements to disclose votes.

All jurisdictions provide a framework for institutional investors to address conflicts of interest. Disclosure of policies to manage conflicts of interest and their implementation is also increasingly required or recommended, reaching 71% of jurisdictions in 2022, up from 64% in 2020.

In recent years, besides bans or legal requirements to manage some types of conflicts of interest, a number of jurisdictions have introduced professional codes of behaviour. Nearly all surveyed jurisdictions now require or recommend at least one type of institutional investor to have policies to manage conflicts of interest or prohibit specific acts. More than half of all surveyed jurisdictions now have legal requirements for disclosure (including ten with both legal requirements and code recommendations), while six jurisdictions rely upon code recommendations alone (Figure 3.13).

A growing number of jurisdictions provide specific requirements or recommendations with regard to various forms of ownership engagement, such as monitoring and constructive engagement with investee companies, maintaining the effectiveness of monitoring when outsourcing the exercise of voting rights, and engaging on matters related to sustainability.

Some jurisdictions go beyond requirements or recommendations to encourage voting, providing more specific requirements or guidance with regard to other forms of ownership engagement. In Europe, this tendency has been bolstered by the requirements set out in the EU SRD II. Requirements or recommendations that institutional investors monitor investee companies are most common (41 jurisdictions). Constructive engagement, generally involving direct dialogue with the board or management, is now required in 14 jurisdictions, while another 14 rely upon code recommendations. Thirty-two jurisdictions require or recommend that institutional investors maintain the effectiveness of supervision when outsourcing the exercise of voting rights to proxy advisors or other service providers (Figure 3.14). While the requirements or recommendations that apply directly to institutional investors do not appear to have changed significantly since 2019, many jurisdictions have introduced specific requirements with respect to the proxy advisors themselves.

Several jurisdictions also set forth requirements and recommendations regarding engagement on matters of sustainability. While this is a relatively new trend, it is now required in 12 jurisdictions, while another 13 rely upon code recommendations. Both Japan and the United Kingdom included sustainability considerations in the revisions to their stewardship codes in 2020.

In recent years, there have been important regulatory developments regarding proxy advisors and other advisory services.

Regulatory requirements related to proxy advisors have become increasingly common. The relevance of such requirements is reflected in the G20/OECD Principles, as revised in 2023, which recommend that proxy advisors, ESG rating and data providers and other service providers that provide analysis and advice relevant to investor decisions “disclose and minimise conflicts of interest that might compromise the integrity of their analysis or advice” (Principle III.D). Furthermore, the methodologies employed by service providers should be transparent and publicly available to clients and market participants.

While requirements and recommendations for proxy advisors or other service providers may be similar to those for institutional investors, it must be noted that these requirements may also differ significantly. For example, institutional investors have a different type of fiduciary duty to the beneficiaries of their funds compared to proxy advisors, who serve in a capacity as advisors to institutional investors rather than to the beneficiaries of such funds. Nevertheless, there are also similarities in terms of the types of recommendations that apply to each group, for example, with respect to policies dealing with conflicts of interest, disclosure of such policies as well as activities related to investor engagement that proxy advisors may engage in on behalf of their institutional investor clients.

While the number of jurisdictions enacting regulations related to proxy advisors or other advisory services has increased in recent years, they remain far less common than for institutional investors (Figure 3.15).

The most common requirements involve policy-setting and disclosure related to conflicts of interest, required in 16 jurisdictions (33%). Seven jurisdictions have codes recommending that proxy advisors set conflicts of interest policies (including one with both a legal requirement and a code recommendation), while six have code recommendations for disclosure (again with one involving both types of provisions). A third common provision for proxy advisors (required or recommended in 19 jurisdictions) is to disclose their policies related to voting. Requirements or recommendations for proxy advisors to undertake constructive engagement or monitoring of companies are rare, and typically would be undertaken on behalf of the institutional investors that they are representing.

Jurisdictions have taken varying approaches to regulation of proxy advisors, with 49% overall reporting requirements or recommendations on the abovementioned topics.

In line with the G20/OECD Principles, a number of jurisdictions have established stand-alone laws or regulations specifically applicable to proxy advisors, in some cases supplemented by additional guidance. For example, the SRD II requires EU Member States to ensure that proxy advisors disclose reference to any code of conduct they comply with, report on the application of that code of conduct, explain any derogations from that code or explain why they do not comply with a code and indicate, where appropriate, any alternative measures adopted. They must also annually publish information related to the preparation of their research, advice and voting recommendations on their web site, and identify and disclose to their clients any actual or potential conflicts of interest that may influence the preparation of those recommendations, along with the actions taken to eliminate, mitigate or manage those conflicts. The United States’ Investment Advisers Act of 1940 and regulation on Proxy Voting by Investment Advisors is supplemented by SEC guidance regarding the proxy voting responsibilities of investment advisers exercising proxy voting authority with respect to client securities, including examples to help investment advisers’ compliance with their obligations in connection with proxy voting. On the other hand, India notes that its proxy advisors generally do not vote on behalf of their clients but are nevertheless required to formulate and disclose their voting recommendation policies to them. Some European jurisdictions, such as Finland, while not having enacted specific national implementing regulations with respect to SRD II proxy advisor provisions, nevertheless consider provisions to establish policies with respect to conflicts of interest to apply in their jurisdiction. Canada has implemented a soft-law approach to proxy advisor conduct guidance, while others (Austria and Germany) have transitioned to regulatory requirements over the past two years.

Some jurisdictions have established more integrated frameworks incorporating both institutional investors and their service providers, including proxy advisors, in the same regulation or code. For example, the Malaysian Code for Institutional Investors recommends that institutional investors encourage their service providers (which include proxy advisors) to apply the principles of the Code where relevant and to conduct their investment activities in line with the institutional investors’ own approach to stewardship. Accordingly, service providers are also encouraged to be signatories of the Code. Japan takes a similar approach, recommending in its stewardship code that service providers “contribute to the institutional investors’ effective execution of stewardship activities.” In the United Kingdom, the revised Stewardship Code 2020, provides a distinct set of principles for related intermediaries, holding them to a higher standard than regulatory requirements (Gibson Dunn, 2019[11]).

Practically all jurisdictions (47) define company groups or their elements in multiple or single sources such as company law/regulations, securities law/regulations, national corporate governance codes, listing rules and others.

Company groups are a common feature of the global ownership landscape, with corporations – in particular listed ones – often serving as important owners of listed companies as part of company group structures (Medina, de la Cruz and Tang, 2022[12]). The G20/OECD Principles, as revised in 2023, include new recommendations aimed at improving the definition, oversight and disclosure of company groups. They recognise that well-managed company groups operating under adequate corporate governance frameworks can support economic growth and employment through economies of scale, synergies and other efficiencies, but that in some cases they may be associated with risks of inequitable treatment of shareholders and stakeholders. To address such risks, Principle I.H recommends that jurisdictions adopt clear regulatory frameworks including a practical definition and criteria for the effective oversight of publicly traded companies within company groups.

The definition of company groups can be explicitly provided in law or regulation, or the concept may be defined implicitly, by separately identifying the typical elements of a group, such as parent, subsidiary, affiliate or associate company. The majority of jurisdictions (28) define company groups or their elements in multiple sources such as company law/regulations, securities law/regulations, national corporate governance codes, listing rules and others. Nineteen jurisdictions have a single source for defining company groups. Only Canada and China do not have a definition of company groups. Company groups or their elements are mostly defined in company law/regulations (38 jurisdictions) and in securities law/regulations (24 jurisdictions).

As shown in Panel B of Figure 3.16, a large majority of jurisdictions (38) define criteria for when a set of companies are regarded as constituting a group in company law/regulations. Securities law/regulations of 24 jurisdictions also provide a specific definition. Only 11 jurisdictions have listing rules that include a specific reference to company groups. In only four jurisdictions (Colombia, Finland, Saudi Arabia and South Africa) does the national corporate governance code include a definition of a company group.

Disclosure of important company group structures and intra-group activities for listed companies is required by over 80% of jurisdictions across a range of categories such as major share ownership, special voting rights, corporate group structures and shareholdings of directors. Such disclosure is less widespread in the case of beneficial ownership, shareholder agreements and cross-shareholdings.

The revised Principles recognise the fundamental importance of transparency of share ownership and corporate control. In particular, sub-Principle IV.A.3. establishes that “Disclosure should include, but not be limited to, material information on: Capital structures, group structures and their control arrangements.” The key transparency requirements for company group structures and intra-group activities for listed companies in the Factbook jurisdictions are based on the consolidated financial statements based on IFRS and the disclosure of major shareholdings in annual reports. Despite this commonality, there is not a clear consensus on the level of specificity needed for, among others, the disclosure of ownership, relationships among key shareholders, group structures and governance policies. Major share ownership is disclosed publicly in all but two jurisdictions (Table 3.13). Only in the Czech Republic and in South Africa is this information disclosed to the regulator only. South Africa also allows for voluntary disclosure of major share ownership to the public.

Special voting rights in a company group provide specific shareholders of the group more voting power than a common shareholder. Special voting rights are required to be publicly disclosed in 42 jurisdictions, and six jurisdictions have no provision for such disclosure. Public disclosure of corporate group structures is mandatory in 40 jurisdictions, while there is no provision in seven (Costa Rica, Ireland, Latvia, Singapore, South Africa, Sweden and Türkiye). In Australia and Japan public disclosure of group structures is voluntary. It is mandatory to disclose the shareholdings of directors in 40 jurisdictions. In the Czech Republic and Switzerland public disclosure is voluntary, whereas in Argentina, Brazil and Colombia disclosure is to the regulator only. In the Slovak Republic and South Africa, the disclosure of directors’ shareholdings to the regulator is required and public disclosure is voluntary.

The disclosure of beneficial owners in company groups is particularly important as it facilitates the identification of related parties and therefore helps to address many of the agency issues around company groups. However, requirements for public disclosure of beneficial owners are not as widespread as for the other elements mentioned above. Thirty-four jurisdictions have a mandatory requirement to disclose information on beneficial owners to the public, and in one jurisdiction this is voluntary. However, in some cases such as Israel, this mandatory requirement applies only to interested parties defined as shareholders with a minimum shareholding – 5% in the case of Israel. In 11 jurisdictions companies are required to disclose beneficial owners to the regulator only, and in four of them, Costa Rica, Saudi Arabia, the Slovak Republic and South Africa, they also have the option to disclose it to the public. The remaining jurisdictions have no provision on this issue.

Agreements between shareholders that describe how a company should be operated and outline shareholders’ rights and obligations are also a common feature in company groups. In 35 jurisdictions shareholder agreements are disclosed to the public. In Finland, listed companies are liable to publish only shareholder agreements that are known to the company, and shareholders have an obligation to notify the offeree company and the supervisor when a shareholder has entered in such an agreement. In Japan, public disclosure of shareholder agreements is voluntary, whereas in Greece and the Slovak Republic, companies are obliged to disclose shareholder agreements to the regulator. However, in Greece the requirement applies only if the shareholder agreements lead to significant change in shareholders rights. In 11 jurisdictions (22%) there is no provision to disclose shareholder agreements.

Cross shareholdings, where one publicly traded company holds a significant number of shares of another publicly traded company, are also required to be disclosed, but to a lesser extent. Only 21 jurisdictions require disclosure of cross shareholdings to the public and only two jurisdictions mandate their disclosure to the regulator. One of these is Greece, and the requirement applies only if the cross shareholding leads to significant change in shareholders rights. In the Slovak Republic, public disclosure of cross shareholdings is voluntary. Importantly, in over half of the jurisdictions there is no requirement to disclose information on cross shareholdings.


[9] CNMV (2023), Code of good practices for institutional investors, asset managers and proxy advisors in relation to their duties in respect of assets entrusted to or services provided by them (“Stewardship Code”), https://www.cnmv.es/docportal/Buenas-practicas/CBPinversores_EN.pdf.

[2] Denis, E. and D. Blume (2021), “Using digital technologies to strengthen shareholder participation”, OECD Going Digital Toolkit Notes, No. 9, https://doi.org/10.1787/0fe52016-en.

[8] Fukami, K., D. Blume and C. Magnusson (2022), “Institutional investors and stewardship”, OECD Corporate Governance Working Papers, No.25, https://doi.org/10.1787/22230939.

[11] Gibson Dunn (2019), UK Regulators Make Further Stride in Responsible Stewardship & Investing, https://www.gibsondunn.com/uk-regulators-make-further-strides-in-responsible-stewardship-and-investing/#:~:text=The%20New%20Code%20(which%20covers,investment%20and%20stewardship%20is%20integrated%2C.

[7] Isaksson, M. and S. Çelik (2013), “Institutional Investors as Owners: Who Are They and What Do They Do?”, OECD Corporate Governance Working Papers, No. 11, https://doi.org/10.1787/5k3v1dvmfk42-en.

[6] Magnus, C. and D. Blume (2022), “Digitalisation and corporate governance”, OECD Corporate Governance Working Papers, No. 26, OECD Publishing, Paris, https://dx.doi.org/10.1787/296d219f-e.

[12] Medina, A., A. de la Cruz and Y. Tang (2022), “Corporate ownership and concentration”, OECD Corporate Governance Working Papers, No. 27, OECD Publishing, Paris, https://doi.org/10.1787/bc3adca3-en.

[1] OECD (2023), G20/OECD Principles of Corporate Governance 2023, OECD Publishing, Paris, https://doi.org/10.1787/ed750b30-en.

[4] OECD (2021), The Future of Corporate Governance in Capital Markets Following the COVID-19 Crisis, https://doi.org/10.1787/efb2013c-en.

[3] OECD (2020), National corporate governance related initiatives during the Covid-19 crisis, https://www.oecd.org/corporate/National-corporate-governance-related-initiatives-during-the-covid-19-crisis.htm.

[10] OECD (2011), The Role of Institutional Investors in Promoting Good Corporate Governance, https://doi.org/10.1787/9789264128750-en.

[5] World Bank Group (2021), Are virtual meetings for companies’ shareholders and board members the new normal?, https://blogs.worldbank.org/developmenttalk/are-virtual-meetings-companies-shareholders-and-board-members-new-normal.


← 1. The Proposal for a Directive of the European Parliament and of the Council on multiple-vote share structures in companies that seek the admission to trading of their shares on an SME growth market of 8 December 2022 is available here. The proposal is part of the measures under the Listing Act package and was submitted by the European Commission on 7 December 2022 to the Council and the European Parliament, and is undergoing its first reading within the European Parliament. The Council adopted its position on 19 April 2023 (“negotiating mandate”) on the proposed directive on multiple-vote share structures.

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