British Airways and Iberia parent IAG is fixing the maximum permitted ownership by non-European Union entities at 47.5%, but the company is not currently planning to classify UK shareholders as non-EU.
Airlines which enjoy the benefits of EU traffic rights must ensure that they are majority EU-owned. The UK currently remains an EU member state but its planned withdrawal, dubbed ‘Brexit’, on 29 March has caused EU carriers to examine the implications of UK shareholdings.
But Spanish-based IAG says that UK investors “are not and will not be treated as” non-EU entities.
As a result UK investors will not be subject to the restrictions set by its new limitation “unless IAG notifies shareholders otherwise”, says the company, adding: “IAG has no plans to issue such a notification.”
IAG has exercised powers under its corporate bylaws to set the 47.5% maximum limit for non-EU shareholding – a limit which has already been reached, according to the company’s share register.
It states that the measure is “necessary” and it is giving “no assurance” as to when – or if – its imposed limit will be lifted.
IAG’s bylaws allow the board to specify a permitted maximum of shares held by non-EU parties, on condition that this is not less than 40% of the company’s capital stock.
Given that the 47.5% threshold has already been reached, the decision means that non-EU entities will no longer be allowed to acquire IAG shares, and the company’s board says it will “not issue any certificate” which would make such acquisitions effective.
Any shares acquired by non-EU entities from this point will be treated as “affected” stock, and the purchaser will be notified that voting rights linked to these affected shares, as well as the right to attend shareholders’ meetings, will be suspended.
The purchaser will also be ordered to dispose of the affected shares within 10 days of the notification – and ensure that they are not divested to any other similarly invalid buyer.
IAG says that, if this requirement is not carried out, the board could order the company to acquire the shares at a price determined by a valuation formula.