European Shareholder Rights Directive proposals: a critical analysis in mapping with the UK Stewardship Code?

Abstract

The proposed amendments to the EU Shareholders’ Rights Directive purport to improve shareholder rights and powers in investee companies. In general, these initiatives provide minority shareholders with confidence in corporate governance and could be useful as a supply-side stimulating measure to encourage investor interest in pan-European equity markets, therefore contributing to the much-needed European initiative to develop deep and liquid capital markets in order to provide corporate finance. (For example, the EU Capital Markets Union initiative.) This paper focuses on the Articles that purport to develop ‘shareholder stewardship’ on the part of institutional shareholders. The Articles seem to be derived from the UK Stewardship Code, which legitimises and encourages active corporate governance roles for shareholders, therefore boosting their corporate governance rights. However, this paper critically questions that apparent resemblance, and argues that the Articles borrow the cloak of the stewardship concept to introduce regulatory measures for investment management practice, and the purpose and function of these Articles may not accord with the essential ‘corporate governance’ paradigm that Directive is framed in.