Spain to keep voting caps – for now

Moves in the Spanish parliament to abolish the 10% voting caps at certain Spanish companies have ground to a halt ahead of Friday’s Iberdrola AGM.

Spain introduced limitations to voting rights in 1951, directly copying a similar German law, with a view to protecting minority shareholders from dominant shareholders. In 2006 the “Unified Code of Corporate Governance of Listed Companies” initiated by the Commission Nacional del Mercado de Valores advocated the abolition of voting limits. In February the ruling Socialist Party announced proposals to abolish the restrictions to bring about “one share one vote” democracy in line with wider European and global best practices.

The debate has come to a head after leading 12% shareholder in Iberdrola, ACS, attempted to install one of its nominees to the board for the fourth time. Iberdrola has argued that giving ACS a board seat would represent a conflict of interest because the two compete in the energy sector. The Basque Nationalist Party (PNV) has now proposed a delay to the so-called “Florentino amendment” in reference to ACS chairman Florentino Perez who is seeking the Iberdrola seat.

But this debate isn’t about good governance; shareholders are being caught up in a fierce political debate between Spanish nationalists, Basque separatists and Industry Minister Miguel Sebastian’s agenda to restrict international control over energy companies.

In a last minute twist, Reuters has reported that Juan Luis Arregui, deputy chairman and Iberdrola’s largest individual shareholder with 0.58 percent, has steped down from the board to deflect any accusations of conflicts of interest. Arregui is chairman of papermaker Ence which has renewable energy interests that could be classed as a competitor to Iberdrola.

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