58 resolution or even an action to hold directors or others liable. A number of Member States have recognised the need for a special investigation procedure. The core provisions are rather similar, but the details vary considerably. In some Member States, special investigations are rare whereas, in others, they are much more common and used for a variety of purposes. In most of them, it is recognised that the special investigation procedure, even if it is rarely used, is an important deterrent or “fleet in being”.
The special investigation procedure offered in several Member States is an important deterrent
In accordance with the vast majority of responses to the Consultation Document, the Group believes that the shareholders’ right to vote and their standard right to information should be supplemented by a European framework rule on the right of shareholders to require a special investigation and the procedure for it. The Group recommends the extension of the special investigation right to all companies, whether listed, open or closed. Such rights are particularly relevant if the company structures are complex and not transparent, as is often the case in groups of companies and in multinational enterprises. Special investigation procedures should not be restricted to the single independent company, but should as far as possible be open to use group-wide, where the issues are sufficiently significant to justify this.
A EU rule on special investigation right was supported by responses to the consultation
Shareholders, in a general meeting or holding a minimum of 5 or 10 per cent of the share capital, should be given the right to apply to a court or appropriate administrative body to order a special investigation. In companies subject to the squeeze-out procedure, the minimum minority holding should not exceed the squeeze-out minority (see further Chapter VI below). The order should only be given when there is a serious suspicion of improper behaviour, in order to avoid the procedure being used as a “fishing expedition” or as an instrument of harassment. The investigation should be conducted by the court or administrative body ordering the special investigation, or by professionals under its supervision. A special investigation procedure offers an efficient and overall not too costly form of enhanced shareholder information.
Investigation right should be open to general meeting or a significant minority
The European framework provision can be short and precise. The details should be left to the Member States in order to enable them to make the rule compatible with the procedural and administrative practice in their jurisdictions. Also, the European provision should refrain from indicating what the (potential) sanctions of the findings of special investigation should be, as sanctions are generally left to national law. But Member States should ensure that they have effective sanctions in place. Also, we note that director’s disqualification is a particularly effective sanction which should be
Details of the procedure should be left to Member States
The Group recommends it for all companies And where possible on a group-wide basis
Authorisation should be based on serious suspicion
As well as the determination of proper sanctions