Shareholders’ Rights and Key Ownership Functions
Shareholders enjoy all rights conferred upon them by the Lebanese Code of Commerce (CC) and by the Statutes of the Bank including the right to vote at assemblies, the right to dividends, the right to sell their shares, the preferential right to subscribe to capital increases, as well as all rights described in this code.
Right to Attend and Vote at Assemblies
Every shareholder is entitled to take part in the different meetings held for the formation and the running of the Bank, and to vote therein.
Each share held carries one vote when issued, irrespective of whether it has been fully paid up or not. The voting power each member may command depends on the number of shares held. A shareholder may not be deprived of his voting rights, which in principle can be neither restricted nor denied except for where conflict of interest arises.
Double voting rights
In accordance with the Lebanese Code of Commerce, shares that have been owned by the same shareholder for more than two years carry a double voting right even if the shares were transferred through inheritance, donation, or legacy but not through purchase. The conditions required to exercise this double voting right are that the shares be:
Criminal liability is imposed upon any person who fraudulently causes or attempts to cause a fictitious majority (e.g. by pretending to be the holder of shares actually belonging to others or by handing out bribes to secure votes in favor of a resolution). Persons guilty of such an offence incur the penalties for swindling.
Right to Dividends for Ordinary Shareholders
Shareholders are entitled to distribution of dividends and shall not be deprived of this right when the Bank declares such dividends. Dividends are distributable when the annual general meeting approves the financial accounts of the Bank and within a period of time that is in accordance with the relevant general assembly resolution and only after receipt of payments distribution by preferred shareholders.
Preferential Right to Subscribe to Capital Increases
In the event of an issue of additional shares upon an increase of capital, existing shareholders may exercise a preferential right to subscribe for such additional shares in proportion of their interests in the Bank provided the new shares are issued for cash. This right may not be restricted unless the extraordinary general meeting, which resolves upon an increase of capital, decides to suppress this preferential right, reduce or modify it. In all cases, the capital increase shall not confer a special advantage to a certain class of shareholders.
Right to the Refund of the Nominal Amount of Shares upon Liquidation
Upon dissolution of the Bank, shareholders are entitled to the repayment of the nominal amount of their shares, inasmuch as the Bank’s assets permit, after corporate creditors and preferred shareholders have been satisfied. Such repayment is subject to liquidation preferences.
Right to Participate in Surplus Assets upon Liquidation
Upon dissolution of the Bank, shareholders are entitled to participate, in proportion to their shareholding, in any surplus assets once the capital has been repaid.
Right to Free Transferability of Shares
In principle, all shares of the Bank are freely transferable, subject to limited restrictions as follows.
Trading in the Bank’s current shares is not subject to any legal restrictions, except for the case of Directors’ Guarantee shares; these shares are held by a member of the Bank’s Board of Directors and are not transferable for as long as the director holds his/her office.
Transfer of shares is subject to pre-approval of the Central Bank in the following cases:
When the subscriber or the assignee acquires directly, or through a fiduciary contract in accordance with Law 520 of June 6, 1996, more than 5% (five percent) of the total shares of the bank or of the voting rights, whichever is higher.
When, upon assignment of the shares, the assignee holds 5% (five percent) or more of the total shares of the bank or of the voting rights, whichever is higher.
When the subscriber or the assignee is a Board member or a Senior Manager.
Shares are freely transferable subject to limited restrictions as per the Bank’s by-laws. The Bank’s Board of directors should grant pre-approval on the identity of potential buyers except in the case of shares listed on the Beirut Stock Exchange. In case of approval, the transfer shall take place within forty-five days from the notification of approval. In case of refusal, the Board of directors shall find another buyer within forty-five days of the date of refusal.
The above restrictions apply as well to transfers pursuant to:
Waiving of the right to receiving free shares.
The transfer of shares through inheritance or by will is not subject to the abovementioned restrictions.
Right to Access Information
Shareholders can access a variety of information on the Bank, including audited financial statements, through the Bank’s annual report which can be viewed on the Bank’s website.
Right to Appoint a Proxy
Shareholders are expected to attend and vote personally at meetings. However, they have the right to appoint a proxy to attend and vote at meetings for them with the following restrictions:
The Protection Of Minority Shareholders
Shareholders’ interests shall be protected to the greatest extent possible insofar as it does not conflict with what the Board deems as being in the best interest of the Bank.
Rights with regard to Shareholders’ Meetings
Shareholders representing one fifth of the Bank’s share capital may request the external auditors to call the assembly to resolve upon the issues proposed by the said shareholders.
Shareholders representing one fifth of the Bank’s share capital may place items on the agenda of the ordinary shareholders’ meeting provided the request is presented to the Board of directors at least fifteen days before publication of the notice calling for convening of the general assembly.
Shareholders must be convened to shareholders’ meetings at least twenty days in advance of such a meeting by means ensuring proper and timely notification of shareholders.
Right to make Informed Decisions
The Bank shall support shareholders’ right to make informed decisions and the right to be informed of corporate issues that are subject to shareholder vote.
Shareholders shall be provided access to and furnished with all relevant information concerning corporate meetings in a timely manner.
Right to Have Access to Information
Each shareholder may, during regular business hours and upon reasonable notice, access, in a timely manner and at the Bank’s principal place of business, all books and accounts of the Bank that are to be made available to shareholders within the fifteen days preceding shareholders’ annual meetings, including this code as well as documents that individual shareholders may access pursuant to applicable laws and regulations, and the Bank’s internal regulations.
The person chairing the assembly shall announce at the onset of the meeting the shareholders’ right to be informed and ask questions on the issues placed on the agenda as well as the shareholders’ right to request the meeting’s adjournment if they deem themselves to be insufficiently informed.
If during the general assembly, shareholders representing at least 20% and no more than 25% of such assembly deem themselves to be insufficiently informed on the issues to be resolved upon, the assembly shall be adjourned and be held within eight days.
Shareholders may be given access to the following information and documents immediately upon the shareholders’ request prior to a general assembly:
The Bank’s inventory. It should be noted that the Bank’s inventory may only be reviewed at the Bank’s premises
Balance sheet and profit and loss accounts and consolidated balance sheet and profits and loss accounts for the preceding year
The external auditors’ report
The Board’s report
An updated list of shareholders.
Right to Ask Questions
Shareholders have the right to address written questions to the Board at least fifteen days prior to convening the general assembly. The Board shall answer such questions during the meeting. During the general assembly; any shareholder may ask questions to any member of the Board present concerning the suggested agenda or resolutions as part of the deliberations. The chairperson may not submit a resolution for vote until such time when no shareholder is requesting the floor to ask a question concerning the said resolution.
Secure, reliable, and accurate records of ownership
All bank shares shall be registered and safeguarded at Midclear sal, the central depository agency.
Proofs of ownership, trading operations, share pledging, and the institution of other rights over bank shares shall be effected through the books of Midclear sal.
The Bank’s share structure shall be clear and control rights attached to shares of the same class shall be uniform and easily understood.
The registrar function of Midclear sal is assigned the following responsibilities:
- Change of ownership as a result of trading
- Change of ownership as a result of inheritance or will
- Pledging and un-pledging of shares
- Freeze initiated by the Court
- Freeze of shares for guarantee purposes
- Statement of ownership of nominal shares
- Attendance list for general assembly meetings