Shareholders’ Duties As a Vehicle for Transformation of EU Company Law

In recent years discussions about shareholders’ rights have gradually been supplemented by discussions about shareholders’ duties. This trend is reflected in company law and capital markets law, where duties have increasingly been imposed on shareholders in relation to their investee companies and those companies’ stakeholders. Consequently, there is a need not only to examine more closely the duties that have been imposed on shareholders, but also to consider where this trend is taking shareholders and European company law and capital markets law. The role of the powerful shareholder is interesting, as they may act as a mechanism holding the management to account in the companies they invest in. Thus, shareholders should be encouraged to exercise their powers for the good of the company.

However, at the same time others warn that powerful shareholders can potentially have a negative influence on the companies they invest in and on company stakeholders so that shareholder power must be constrained. Unless the effects of shareholders’ duties are fully understood, there is a risk that a stronger emphasis on shareholders’ duties in company law and capital markets law will not result in the necessary transformation of European company law towards more sustainable business practices.