EMPTY VOTING AND THE PRINCIPLE OF NON-SPLITTING OF SHARE – THE EUROPEAN LAW LEGISLATIVE FRAMEWORK

Abstract

The non-splitting (indivisibility) of a share constitutes one of the fundamental principles of company law. It encompasses the idea that the voting rights (‘control rights’) and economic interests (‘economic rights’ or ‘ownership rights’) are intrinsically bound up in a single share. In recent years, “empty voting” – a tactic allowing to decouple voting rights from economic ownership which embrace a variety of factual circumstances that ultimately result in a partial or a full separation of the right to vote at a shareholders’ meeting from beneficial (i.e. economic) ownership of the shares on the meeting date to influence company’s decision-making process without the intention to hold shares for a longer period of time has become interest of the European legislator. This paper investigates how the European law legal framework approaches to combat the issues caused by empty voting and thus how the principle of non-splitting (indivisibility) of shares in upheld in the EU law. The article explores the features of empty voting, characterizes various approaches to minimizing its impact on the disintegration of a share (i.e., a violation of the principle of non-splitting) and proper functioning of a company, and tries to evaluate the legislative reactions to this phenomenon at the level of EU law level – (Transparency Directive and Shareholders Rights Directive). It also discusses examples of the implementation of the measures in the Polish legal order (i.e. record date system). It is argued that already undertaken regulatory steps: disclosure and information obligations should be seen as a step forward that contributes to upholding the principle of non-splitting of shares in public companies, although they do not forbid the empty voting itself.