Global Capital Markets
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Global Capital Markets

A Survey of Legal and Regulatory Trends

Edited by P. M. Vasudev and Susan Watson

This topical volume examines key developments in the law regulating capital markets, drawing on examples from around the world – including United States, Canada, Europe, China, India, and New Zealand. With perspectives from international scholars, chapters look at current issues including the regulation of crowdfunding, efforts in Europe for shareholder empowerment, hedge fund activism in Canada, international regulatory cooperation, and regulation of corporate governance in China through securities law rules.
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Chapter 3: The proposed Directive on the encouragement of long-term shareholder engagement in European listed companies: a critical appraisal

Corrado Malberti

Abstract

In the aftermath of the Financial Crisis of 2008–09, the reactions of the European Union to the problems raised by corporate governance were slow and were mainly addressed to the reform of the governance of financial institutions. Only in April 2014 did the European Commission present a proposal for a Directive on the encouragement of long-term shareholder engagement addressed to all listed companies. This chapter argues that, considering the evolution of the academic and political debate, the expected impact of the Commission’s proposal, if it is finally adopted, will be modest and will probably not achieve its intended shareholder empowerment goals. The chapter suggests that the reasons for this anticipated poor outcome are rooted in (a) the lack of a satisfactory theoretical and empirical basis to support the adoption of the measures proposed; and (b) the inherent weaknesses of European law in creating a single and coherent legal framework for corporate governance. The chapter concludes by reiterating the risks in relying on the inherent weaknesses of European law in the attempt to correct proposed legislation in ways that are not supported by solid empirical evidence. Keywords: • European corporate governance • Say on pay • Shareholder engagement • Shareholder Rights Directive • European Commission Green Paper 2011 • European Commission Action Plan

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