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.
Highlights
We are of the view that the Articles discussed in this paper 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
The gradual hardening of shareholder engagement norms serves the public interest purpose, and is a form regulation of investment management practices, such norms are expressed as corporate governance standards
In the area of company law which is not subject to maximum harmonisation in the EU, it is queried to what extent Articles 3f to 3i of the proposed Shareholders’ Rights Directive may sharpen the underlying ideological contests between the UK and the EU or among Member States of different leaning
Summary
The proposed amendments to the EU Shareholders’ Rights Directive purport to improve shareholder rights and powers in investee companies. 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, contributing to the much-needed European initiative to develop deep and liquid capital markets in order to provide corporate finance. We are of the view that the Articles discussed in this paper 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.
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