European Shareholder Rights Directive Proposals: A Critical Analysis in Mapping with the UK Stewardship Code?

My article entitled ‘European Shareholder Rights Directive Proposals: A Critical Analysis in Mapping with the UK Stewardship Code?’ will shortly be published in the ERA Forum, which is the flagship journal of the European Academy of Law. This piece was based on a presentation delivered at the ERA on 17 August 2015, and can now be found at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2782860.

My article deals with a critical evaluation of the proposed amendments to the EU Shareholders’ Rights Directive. The proposed amendments purport to improve shareholder rights and powers in investee companies. In general, these initiatives provide minority shareholders with confidence in corporate governance and could be useful as a supply-side stimulating measure to encourage investor interest in pan-European equity markets, therefore contributing to the much-needed European initiative to develop deep and liquid capital markets in order to provide corporate finance. This paper focuses on the Articles that purport to develop ‘shareholder stewardship’ on the part of institutional shareholders. I note that the Directive’s provisions seem to be derived from the UK Stewardship Code, which legitimises and encourages active corporate governance roles for shareholders, therefore boosting their corporate governance rights. However, my paper questions that apparent resemblance, and argues that the Articles borrow the cloak of the stewardship concept to introduce regulatory measures for investment management practice. The purpose and function of these Articles may not accord with the essential ‘corporate governance’ paradigm in which the Directive is framed.

Iris H-Y Chiu is a Reader in Law at University College London.