EUROPE - European Corporate Governance Service (ECGS), an alliance of the leading corporate governance research and advisory groups in Europe, has recommended support a shareholder resolution to be proposed at Ericsson's forthcoming AGM, on March 27 to equalise the voting rights of its ordinary shares.
Ericsson’s listings on the German, London Paris and Swiss exchanges and Nasdaq are of its B shares (or ADR equivalent) which have only one thousandth the voting power of an A share. This means that while foreign shareholders own 55% of the capital this entitles to them to less than 2% of the votes.
Conversely, with 7% of the capital, the main holders of the the A shares – Investor and Industrivärden - control two thirds of the votes. The resolution has no chance of succeeding as shareholders with more than 50% of the voting rights will oppose the resolution. In ECGS’s view, shareholders should still use their votes to demonstrate support equal enfranchisement.
The main shareholders’ control is further entrenched as at least half of Ericsson’s board - after changes proposed at the AGM - have business or other links with either or both of the main holders of the A shares, including the proposed chairman designate, Michael Treschow.
ECGS managing director Alan MacDougall said We consider that Ericsson’s board should have supported this resolution on the principle that all equity shareholders bearing the same risks and rewards should hold the same voting rights. It is disappointing to see senior UK executives such as Sir Peter Bonfield and Peter Sutherland prepared to sit on the board of a company which is not prepared to treat all its shareholders equally.
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