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The Case against Harmonisation of Shareholder Rights

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Abstract

This article discusses the plans of the European Commission to harmonise shareholder rights in the European Union. At the same time, it puts forward various reasons why this would not be a significant step forward and argues that it should therefore be reconsidered whether the intended directive on shareholder rights is really needed.

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References

  1. Communication from the Commission to the Council and the European Parliament, Modernising Company Law and Enhancing Corporate Governance in the European Union — A Plan to Move Forward, COM (2003) 284; Final Report of the High Level Group of Company Law Experts (2002), available at: http://europa.eu.int/comm/internal_market/en/company/company/modern/consult/report_en.pdf. For the most recent proposals, see http://europa.eu.int/comm/internal_market/company/index_en.htm.

  2. The consultation documents of 16 September 2005 and 13 May 2005, as well as the synthesis of the comments of April 2005, are available at: http://europa.eu.int/comm/internal_market/company/shareholders/index_en.htm.

  3. First consultation document, p. 5; second consultation document, pp. 4–5.

  4. Second consultation document, pp. 8–11.

  5. Ibid., pp. 11–12.

  6. Ibid., pp. 12–16.

  7. Ibid., p. 18.

  8. Ibid., pp. 7–8.

  9. Ibid., pp. 5–7, 16–18.

  10. Second Council Directive 77/91/EEC of 13 December 1976 on coordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Art. 58 of the Treaty, in respect of the formation of public limited liability companies and the maintenance and alteration of their capital, with a view to making such safeguards equivalent, OJ 1977 L 26/1.

  11. Report available at: http://europa.eu.int/comm/internal_market/en/company/company/official/6037en.pdf.

  12. Final Report of the High Level Group of Company Law Experts (2002), p. 79 et seq.; Modernising Company Law and Enhancing Corporate Governance in the European Union — A Plan to Move Forward, pp. 17 and 24.

  13. Proposal for a Directive amending Directive 77/91/EEC, COM (2004) 730.

  14. See, e. g., second consultation document, pp. 13–14.

  15. Ibid., p. 11.

  16. Ibid., p. 9.

  17. Synthesis, loc. cit. n. 2, at p. 4.

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  22. Second consultation document, p. 5; different still first consultation document, p. 9.

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  24. See Art. 17 of Directive 2004/109/EC on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC, OJ 2004 L 390/38; see also first consultation document, pp. 6–7.

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  33. See also M.M. Siems, Die Konvergenz der Rechtssysteme im Recht der Aktionäre (Tübingen, Mohr Siebeck 2005) pp. 475–476.

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  36. Commission Decision of 28 April 2005 establishing a group of non-governmental experts on corporate governance and company law.

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  40. See L. Enriques, ‘Silence is Golden: The European Company as a Catalyst for Company Law Arbitrage’, 4 J.C.L.S. (2004) p. 77; M.M. Siems, ‘The Impact of the European Company (SE) on Legal Culture’, 30 ELR (2005) p. 431 at pp. 435–441; for a different view, see J.A. McCahery and E.P.M. Vermeulen, ‘Does the European Company Prevent the “Delawareeffect”?’, 11 ELJ (2005) p. 785.

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  42. Cf., A.H.M. Daniels, ‘Should Provinces Compete? The Case for a Competitive Corporate Law Market’, 36 McGill Law Journal (1991) p. 138; P. Rose, ‘EU Company Law Convergence Possibilities after Centros’, 11 Transnat’l L. & Contemp. Probs. (2001) p. 121 at pp. 135–136; E.-M. Kieninger, Wettbewerb der Privatrechtsordnungen im Europäischen Binnenmarkt (Tübingen, Mohr Siebeck 2002) p. 25 et seq.

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  44. For instance, it is not the case that in some countries (e. g., the United Kingdom) only shareholder interests matter, whereas in others (e. g., Germany) stakeholder interests are paramount, because in reality there are various overlaps and modifications; see Siems, op. cit. n. 33, at p. 228 et seq. and also pp. 384 et seq., 409 et seq. and 485 et seq. on regulatory competition in the European Union.

  45. Second consultation document, p. 12.

  46. Ibid., p. 9.

  47. See Siems, op. cit. n. 33, at p. 444 et seq.

  48. Second consultation document, p. 15.

  49. Company Law Review, Presented to Parliament by the Secretary of State for Trade and Industry by Command of Her Majesty (2005), Cm 6456, D40, available at: http://www.dti.gov.uk/cld/WhitePaper.pdf.

  50. Second consultation document, pp. 10 and 14.

  51. See Siems, op. cit. n. 33, at p. 325 et seq. and section 3.2 above.

  52. See http://www.dw-world.de/dw/article/0,1564,1589069,00.html.

  53. Second consultation document, p. 10.

  54. Ibid., pp. 7–8.

  55. Final Report of the High Level Group of Company Law Experts (2002) p. 49.

  56. First consultation document, p. 7; second consultation document, p. 3.

  57. Second consultation document, p. 7, see also section 3.1 above on clearing and settlement.

  58. Second consultation document, pp. 16–18.

  59. See, e. g., C. Bernasconi, R. Potok and G. Morton, ‘Introduction’, in R. Potok, ed., Cross Border Collateral: Legal Risk and the Conflict of Laws (London, Butterworths/LexisNexis 2002) pp. 21–27.

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  60. Second consultation document, p. 13.

  61. See E. Ferran, Company Law and Corporate Finance (Oxford, Oxford University Press 1999) p. 266; P. Davies, ‘United Kingdom’, in T. Baums and E. Wymeersch, eds., Shareholder Voting Rights and Practices in Europe and the United States (London, Kluwer Law International 1999) p. 331 at p. 351.

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  62. Details of the criticism will be elaborated in M.M. Siems, ‘§ 131 AktG’, in G. Spindler and E. Stilz, eds., AktG, Kommentar [Annotated Code on the German law on joint-stock companies] (Munich, Beck 2006).

  63. See U. Noack, ‘Hauptversammlung der Aktiengesellschaft und moderne Kommunikationstechnik — aktuelle Bestandsaufnahme und Ausblick’, Neue Zeitschrift für Gesellschaftsrecht (2003) p. 241 at p. 249; Siems, op. cit. n. 33, at pp. 450–452; on the functions of the general meeting in general, see also R. Strätling, ‘General Meetings: a dispensable tool for corporate governance of listed companies?’, 11 Corporate Governance (2003) p. 74 at pp. 74–75.

  64. On the ‘rational apathy’ of shareholders, see, e. g., B.R. Cheffins, Company Law: Theory, Structure, and Operation (Oxford, Oxford University Press 1997) p. 241; Siems, op. cit. n. 33, at pp. 111–114.

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  65. See section 3.2 above.

  66. See sections 3.1 and 3.4 above.

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Authors and Affiliations

  1. Riga Graduate School of Law, Latvia

    Mathias M. Siems (Associate Professor, Visiting Fellow)

  2. Centre for Business Research, University of Cambridge, England

    Mathias M. Siems (Associate Professor, Visiting Fellow)

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Siems, M.M. The Case against Harmonisation of Shareholder Rights. Eur Bus Org Law Rev 6, 539–552 (2005). https://doi.org/10.1017/S1566752905005392

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