DEBT FINANCING. EU watchdog to study "empty voting" at meetings

LONDON (Reuters) - European Union regulators followed their U.S. counterparts on Wednesday by looking into "empty voting", a tactic used by activist hedge funds and other investors to influence company meetings.
Empty voting refers to borrowing shares in order to vote in shareholder meetings, even though the holder has no economic interest at stake.
It could involve an investment bank who bought shares to hedge a derivatives position. The bank won't lose money if the shares fall in value but can still vote.
The European Securities and Markets Authority (ESMA), an EU regulator, launched a call for evidence asking for examples of empty voting at listed companies in the 27-nation bloc.
"On the basis of the information gathered, ESMA will assess whether there is need for further work in this area," the watchdog said in a statement.
Two member states, France and Portugal, have or are planning to address empty voting, but there are no EU rules.
The European Corporate Governance Forum of the EU's European Commission, regulators, issuers and investors, said last year that empty voting techniques increasingly exercise significant influence on listed companies and the key decisions shareholders can take.
"The Forum recommends the introduction of an assumption in company law that shareholders who take part in a general meeting own the corresponding economic interest in the voted shares," it said.
The U.S. Securities and Exchange Commission (SEC) launched a public consultation last year on proxy and empty voting.

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