European Business Organization Law Review

Table of Contents - December 2011 - Volume 12, Issue 04  

Articles

The Rise of Long-Term Minority Shareholders' Rights in Publicly Held Corporations and Its Effect on Corporate Governance

Andrea Sacco Ginevria1*

a1 Assistant Professor of Business Law and Securities Regulation, University of Roma Tre and European University of Rome; Visiting Scholar, Columbia University School of Law (2011); Temporary Research Fellow (assegnista di ricerca) in Business Law, LUISS Guido Carli University of Rome (2011); LLM, Fordham University School of Law (2011); PhD in Law and Economics, University of Roma Tre (2010); JD, LUISS Guido Carli University of Rome (2004).

Abstract

To promote a smooth and effective exercise of minority shareholders' rights attached to voting shares in publicly held companies, some regulators and law-makers have recently enacted provisions granting key rights only to minority shareholders who have been continuously holding a stake for a minimum holding period (‘long-term shareholders’).

This article argues that making certain shareholder rights dependent on continuous ownership is a good way of developing corporate governance because it helps management to act in the long-term interest of the company. In other words, fostering long-term shareholders' activism may be a tool for strengthening the long-term best interest of the corporation because it allows directors to manage their enterprises in a manner that emphasises the long term over the short term.

This article also explores whether the new laws and regulations have an impact on the shareholders' equal treatment norm and briefly addresses certain practical issues that these new laws and regulations could raise.

Keywords

  • long-term shareholders' rights;
  • minority shareholders;
  • shareholder activism;
  • corporate governance;
  • equal treatment norm

* I am grateful to Professors Martin Gelter, Robert Jackson Jr, Marco Maugeri and Richard Squire, and Shannon T. Lazzarini for discussion and insightful comments on this article.