Budget airline EasyJet (EZJ.L) has begun the process of suspending voting rights for non-EU shareholders in order to comply with post-Brexit airline ownership regulations.
EasyJet said in a statement to shareholders on Monday it would suspend the voting rights of some shares held by investors outside of the EU.
The changes are to ensure compliance with EU rules, following the end of the Brexit transition period on 31 December. EU rules require carriers that operate in the bloc to be majority owned by investors based within the EU. EasyJet took the decision to remain majority EU owned and controlled following Brexit in March 2019.
Brexit means 52.65% of EasyJet’s shares are now held outside of the EU. EasyJet will suspend voting rights on a "last in, first out" basis until control is below a cap of 49.5% non-EU ownership.
As of 1 January, those holding such "restricted shares... shall not be entitled to attend, speak or vote at any general meeting of the company,” EasyJet said.
Ryanair said last week that British shareholders would lose their voting rights and Britons would no longer be allowed to buy new shares as of 1 January. UK nationals will not be required to sell any ordinary shares that they owned prior to 1 January.
If EU airlines do not comply with the rules, they could risk losing their licences to operate in the EU.
While the UK averted a no deal Brexit by reaching a last minute trade deal with the EU on Christmas eve, the “skinny” agreement still erected trade barriers between the UK and EU. The changes to aviation ownership structures is just one example of how companies are having to adapt to the new reality.
As airlines work out how to manage EU rules, there are concerns about how sustainable these efforts are or whether they are open to legal challenges by competitors.
Shares in EasyJet fell 2.5% on Monday, underperforming the market.
Watch: 2021: The post-Brexit era begins