The budget airline Ryanair has moved to restrict the voting rights of its British shareholders, in the event of a “hard” or “no deal” Brexit.
Under European Union regulations, EU countries can only grant operating licenses to airlines if those carriers are majority-owned and majority-controlled by EU countries or nationals, unless shareholders come from a country that has a special arrangement with the EU.
With the U.K. about to leave the bloc on March 29, possibly without an exit deal, that poses a problem for certain large airlines with a major British presence, in particular Ryanair and EasyJet.
Last May, Ryanair warned that it would need to strip its non-EU shareholders of their voting rights if Brexit took place without a U.K.-EU arrangement safeguarding its EU operating licences. The Dublin-based airline is 55% EU-owned, but 20% of its stock is owned by U.K.-based shareholders who will, at the end of this month, no longer be in the EU.
As the British Parliament still has not cleared the Brexit deal negotiated between the U.K. government and the EU, there is a real risk of the U.K. crashing out of the EU without the necessary arrangements for airlines. So on Friday, Ryanair’s board triggered its contingency plans.
“With effect from Hard Brexit Day, all ordinary shares and depositary shares held by or on behalf of non-EU (including U.K.) shareholders will be treated as ‘restricted Shares’,” the board resolved, according to a statement. “Restricted share notices will be issued to the registered holder(s) of each restricted share, specifying that the holder(s) of such shares shall not be entitled to attend, speak or vote at any general meeting of the company for so long as those shares are treated as restricted shares.”
As noted by Reuters, Ryanair CEO Michael O’Leary has suggested that the carrier might give British shareholders the opportunity to sell their shares to the company, due to the restrictions.
Of course, if Brexit takes place with a deal, or if it is delayed or cancelled, these changes will not come into effect.
EasyJet, meanwhile, is in a similar boat—without taking into account its British shareholders, the U.K.-headquartered company is only 49% EU-owned, meaning it falls short of the EU licensing requirements.
“If easyJet’s EU ownership remains below the required level in the weeks prior to a ‘no-deal’ Brexit, the Board stands ready to suspend shareholders’ voting rights in respect of a small number of shares, until the ownership reaches the required level, to ensure that easyJet continues to comply with the EU requirement following Brexit,” the carrier said last month.
This week will see a series of crucial votes in the British Parliament that will determine what happens next. On Tuesday, Parliament will vote again on the negotiated deal. If the deal falls for a second time, a vote on Wednesday will determine if the country goes ahead with a no-deal Brexit. Should lawmakers not back a no-deal Brexit, yet another vote on Thursday will involve the question of whether the U.K. should ask the EU for a short extension of the Brexit deadline.