Spain delays vote on shareholder democracy

Spain on Wednesday delayed a decision on whether to ban caps on shareholder voting rights until after Easter, cooling a heated debate before Iberdrola shareholder ACS asks the Basque utility for a board seat at Friday's AGM.

Currently companies in Spain are allowed to restrict shareholder voting rights, but the ruling Socialist Party in February said it proposed making companies give shareholders voting rights equal to their holdings.

The Basque Nationalist Party (PNV) proposed the delay, calling it the "Florentino amendment" in reference to ACS chairman Florentino Perez, who is seeking a board seat for the builder's 12 percent stake in Iberdrola.

"Our proposal ... reflects the damage (hasty) approval would cause to important Basque and Spanish firms," the PNV said in a statement.

The removal of these company bylaws would not only boost the possibility of hostile bids and lift shares in Iberdrola, but also in energy groups like oil company Repsol, which has recently been at odds with its core shareholder Sacyr.

Sacyr is a builder-turned-energy company which is restricted by a 10 percent cap voting right cap despite holding 20 percent of Repsol.

The two groups were recently at loggerheads over strategy at Repsol, which came to a head at the end of 2009 when Sacyr opposed Repsol's 2009 dividend cut, preferring asset sales to lower remuneration.

Iberdrola closed down 1.29 pct, underperforming a 0.19 percent fall in the Stoxx 600 Utility index 0.SX6P, while Repsol shed 1.48 percent, compared to a 0.10 percent gain in the Stoxx 600 oil and gas index 0.SXEP.

Other companies which have 10 percent voting rights caps and would be affected by the ban are mid-sized banks like Sabad and Banco Popular, as well as telecoms giant Telefonica.

"If the law is passed, some companies will certainly be less protected. It is one obstacle less, and it could make corporate moves more attractive or easier in some cases" said Francisco Salvador, a strategist at broker Iberian Equities in Madrid.

If all the Socialist and CiU members of the parliamentary commission vote in favour of the law change and there is just one abstention from the other lawmakers, the proposal will go to the senate or upper house where it may have a rougher ride, analysts say.

There could be debate even among ruling party members. Removal of the bylaws could go against the desire of Industry Minister Miguel Sebastian to allow foreign companies only financial stakes in energy companies.