IngentaConnect SHAREHOLDER PASSIVITY, CROSS-BORDER VOTING AND THE SHAREHOLDER RI...

Abstract:

This paper focuses on the low cross-border turnout of shareholders at shareholder meetings of European issuers. It presents the data that are available on cross-border voting and examines the reasons behind the low cross-border turnout, in relative terms. Opposing the traditional view among US law and economics scholars, this paper holds that law matters in the efforts to facilitate cross-border voting. This is particularly true for procedural requirements. Thus, legislative action, such as the Shareholder Rights Directive, may indeed have beneficial effects on voting turnouts across Europe. The impact of the Shareholder Rights Directive on procedural costs of shareholders is examined in the second part of the paper. The Directive seeks to lessen procedural costs through the use of the internet. While it does not force a kick-start of EUMember States into the digital age, it constitutes a significant step forward in harmonising the procedure of shareholder meetings across Europe. From a procedural point of view, cross-border investors are likely to benefit from the legal certainty that the Directive provides, as well as the lower costs for the digital exercise of shareholder rights in those states which have previously refrained from implementing digital options for shareholders. In the third part of the paper, whether—and, if so, which—additional steps are necessary in order to further reduce procedural costs of cross-border voting is assessed. It is posited that the Shareholder Rights Directive failed to mandate an efficient regime to govern the identification and authorisation of shareholders who hold their shares within a chain of intermediaries, and four remedies to be taken by the European Parliament are suggested.

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SHAREHOLDER PASSIVITY, CROSS-BORDER VOTING AND THE SHAREHOLDER RIGHTS DIRECTIVE