Long-term shareholder engagement in European company law : a legal analysis of shareholder rights and roles

Abstract

In 2014, a new set of amendments to the Shareholder Rights Directive was proposed by the Commission, and after a number of changes this proposal was approved in a first reading by the European Parliament in July of 2015. The main aim of this set of amendments was stated as ‘the encouragement of long-term shareholder engagement’, since one of the causes leading to the outbreak of the financial crisis was identified as the excessive focus on short-termism at the expense of long-term stability. The amendments also provide for two new rights to be enjoyed by shareholders, along with provisions regarding increased disclosure of information and transparency. Institutional investors, asset managers and proxy advisors will also be regulated through the directive. This thesis will focus on analysing the position of the shareholder as it stands today and how his rights and roles will change when the amendments eventually come into force. The shareholder’s role in the financial crisis will also be outlined briefly, and in the last chapter the opinions and suggestions of various authors and scholars with regards to the amendments will be discussed. The influence of foreign law on the proposed amendments will also be examined. Through this analysis, the future effectiveness or otherwise of the amendments can be assessed, particularly by observing the effects of similar provisions which were enacted in various countries. Other possible solutions to the problem of short-termism which were not included in the amendments will also be discussed. The thesis concludes with an opinion on whether the amendments are enough to promote long-term shareholder engagement.