Deviations from Ownership-Control Proportionality - Economic Protectionism Revisited
COMPANY LAW AND ECONOMIC PROTECTIONISM - NEW CHALLENGES TO EUROPEAN INTEGRATION, U. Bernitz and W.G. Ringe, eds., OUP, 2010
32 Pages Posted: 22 Mar 2011 Last revised: 6 Jun 2011
Date Written: 2010
In the wake of the economic crisis of 2008/09 the debate about the desirability of control-enhancing mechanisms that deviate from the traditional one-share-one-vote standard has been reinvigorated. This debate can be seen in the discourse of policy makers and academics that advocate the introduction of multiple voting rights in an attempt to curb the short-termism that is perceived by many to have provided the prevalent business incentive prior to the financial crisis. Alongside such discourse there buds a renaissance in the use of golden shares, in the hope, inter alia, of protecting European industries against Sovereign Wealth Funds from the Middle and Far East. Most of these proposals appear to be ill-advised. In the continental European context, they would reinforce the existing blockholder-dominated share structures to the detriment of minority shareholders. But even in the UK, where the possible introduction of deviations from OSOV has been advanced, these suggestions have to be greeted with reservations. The current discussion seems to leave well-established legal and economic ground actively to support protectionist market forces.
Keywords: one share one vote, short-termism, sovereign wealth funds, corporate governance, multiple voting rights, control-enhancing mechanisms, golden shares
JEL Classification: F15, G32, G34, K22
Suggested Citation: Suggested Citation