Capital structure and shareholder rights
The authorised share capital of the Company is £378,000,000 divided into 1,512,000,000 ordinary shares of 25 pence each and one special voting share of 25 pence. All ordinary shares have equal rights to dividends and capital and to vote at general meetings of the Company. The rights attached to the ordinary shares, in addition to those conferred on their holders by law, are set out in the Company’s Articles of Association.
The special voting share has no dividend rights, limited capital rights and restricted voting rights. The sole function of the special voting share is to ensure that the votes capable of being cast by the UK shareholders of the Company, taken as a whole, need never fall below a majority. Its voting rights would only be triggered if the number of UK shares represent, or are reasonably likely to represent at the time of the next scheduled annual general meeting, 50 per cent or less of the issued ordinary share capital and if the Board considers that, as a result, any air service operating right which is currently granted to, or enjoyed by, the Company may be materially restricted, suspended or revoked. Once its voting rights have been triggered, the special voting share entitles the holder to such number of votes as, when aggregated with the votes which are capable of being cast by holders of the UK shares, are equal to 50 per cent of the total number of votes which are capable of being cast, plus one. On any resolution, votes cast by the holder of the special voting share may only be cast in the same manner and proportion as the votes cast by the UK shareholders. Full details of the rights attaching to the special voting share are set out in the Company’s Articles of Association. The special voting share is held by The Law Debenture Trust Corporation Plc.
The directors may, in the case of shares held in certificated form, in their absolute discretion refuse to register a transfer of shares (not being fully paid shares) provided that, where any such shares are admitted to the Official List of the UK Listing Authority, such discretion may not be exercised in such a way as to prevent dealings in the shares of that class from taking place on an open and proper basis. The directors may also refuse to register a transfer of shares (whether fully paid or not) in favour of more than four persons jointly. Full details of restrictions on the transfer of shares are set out in the Company’s Articles of Association.
The directors may, in their absolute discretion, refuse to register any transfer of the special voting share whatsoever.
Where, under the Articles of Association, a person has been served with an Affected Share Notice, the shares which are the subject of such notice may, subject to the specific terms of the relevant notice, no longer confer on the holder any right to exercise any rights conferred by membership in relation to general meetings, including to attend or vote either personally or by proxy at any general meeting of the Company or any meeting of the holders of any class of shares. In addition, the rights to attend, speak and demand a poll which would have attached to the shares, but for the restrictions set out in the Affected Share Notice, shall vest in the Chairman of the relevant meeting.
The person on whom an Affected Share Notice has been served may also be required to dispose of the shares which are the subject of such notice, in accordance with the provisions of the Articles of Association.
Where, under the Articles of Association, a person has been served with a direction notice as a result of default for the prescribed period in providing the Company with the required information concerning interests in shares held by them those shares shall no longer confer on the holder any right to vote either personally or by proxy at a general meeting of the Company or exercise any other rights conferred by membership in relation to general meetings of the Company or meetings of the holders of any class of shares.
In addition, if the person served with a direction notice holds at least a 0.25 per cent interest in number or nominal value of the issued shares of that class in the Company, then the Board may also withhold payment of all or part of any dividends payable to such person in respect of the shares which are the subject of the direction notice and refuse to register any transfer of such shares until such time as the default is remedied and the Board determines that the direction notice shall cease to have effect.
There may also be restrictions on the transfer of ordinary shares or on the exercise of voting rights attached to them where (i) the Company has exercised its right to suspend their voting rights or to prohibit their transfer following the omission of their holder or any person interested in them to provide the Company with information requested by it in accordance with Part 22 of the Companies Act 2006; or (ii) their holder is precluded from exercising voting rights by the FSA’s listing rules or the City Code on Takeovers and Mergers.
During 2007/08, the Company delisted its American Depositary Shares (ADSs) from the New York Stock Exchange (NYSE) and deregistered and terminated its reporting obligations under the Securities Exchange Act of 1934.
The Company maintains an American Depositary Receipts (ADR) programme in the US as a Level I programme. This means that the Company’s ADSs are traded on the over-the-counter market. Each ADR is the equivalent of 10 ordinary shares and each ADR holder is entitled to the financial rights attaching to such shares, although the ADR depositary is the registered holder of the shares. As at March 31, 2008, the equivalent of 26.2 million shares were held in ADR form (March 31, 2007: 33.7 million shares).
Where shareholders choose to appoint proxies to vote on their behalf on a poll at shareholder meetings (or any adjournment thereof), such appointments must, under the Articles of Association of the Company, be received (whether sent by post or by electronic communication) at such office or address as may be specified in the relevant notice of meeting not less than 48 hours before the time appointed for holding the meeting (or any adjournment thereof).
For the annual general meeting to be held on July 15, 2008, shareholders can appoint a proxy online via the Company’s website or by posting the proxy form to the address set out in the notice of meeting. Proxies (whether submitted online or by post) must be received by 11am on Sunday July 13, 2008. If the shares are held in British Airways Investor Services, the Company Nominee, voting instructions must be received by 11am on Saturday July 12, 2008.
In order to protect the operating rights of the Company, the number of ordinary shares held by non-UK nationals is monitored, as is the number of ordinary shares held by persons who are not nationals of states comprising the European Economic Area (EEA). At March 31, 2008, 31 per cent of the ordinary shares of the Company were held by non-UK nationals (March 31, 2007: 39 per cent) and 19 per cent of the ordinary shares were held by persons who were not nationals of states comprising the EEA (March 31, 2007: 16 per cent). Although there are no large interests of single or associated non-UK nationals, the directors cannot rule out the possibility that the directors may be required to exercise their powers to restrict non-UK or non-EEA share ownership in order to protect the Company’s operating rights.