The Resurrection of the European Shareholder?

The worldwide wave of corporate scandals that marked the last fifteen years has shown, more than the overwhelming power of executive directors, typically inherent in large public corporations, the inadequacy of current national and international legislative systems of counterweights to provide a balanced corporate governance. In particular, there is significant lack of effective control by the general meeting, due to shareholders (even institutional investors) absenteeism and their disinterest to participate in corporate life (rational apathy).

Notably, and in contrast with the options pursued by other legislators, in order to react to the scandals, pursuant to 2007/36/EC Directive on the exercise of certain rights of shareholders in listed companies and, more recently, the GreenPaper2011 on Corporate Governance and the following ActionPlan2012, European Institutions have sought to establish a revised corporate governance framework. The aim being to encourage greater participation in general meetings, the dissemination of pre-meeting information to shareholders, reducing participation costs and granting shareholders more effective rights.

The paper aims to evaluate the measures taken and planned by the European legislator, in order to understand whether the attempt to stimulate shareholder activism, which marks a substantial change in the EU policies, is likely to lead to an effective “rise” of European shareholders. In fact, shareholder direct activism seems to be extremely difficult to stimulate, and to some extent even counter-productive. Nonetheless, the “resurrection” of the European shareholders could turn them to play a substantial role in the appointment of corporate bodies in charge of internal control (indirect activism).