WILL THE SHAREHOLDERS’ RIGHTS DIRECTIVE CURE THE SHORT-TERMISM OF EUROPEAN INVESTORS?
A lot of hopes have been pinned on the new shareholders’ rights directive at European level. Increasing the rights and duties of shareholders as corporate monitors is supposed to cure the short-termism of European shareholders. But we are extremely doubtful on whether the proposed remedies will bring the intended outcome. Instead, we would welcome a draft Directive that highlights the important monitoring role of an effective board of directors.
First and foremost, the draft directive does not take into account the great heterogeneity in shareholding models throughout Europe. The dispersed shareholding model is far from the prevailing form of listed companies throughout the EU. Assuming that institutional investors are the most important shareholder group in the EU is not correct either. Even institutional shareholders, who employ a long-term approach like insurance companies and pension funds, have reduced their corporate share-ownership from 28 percent to 8 percent in Europe in 2012.
Jan-Mar 2015 Issue
European Confederation of Directors’ Associations