Commentary on the Shareholder Rights Directive

16 Pages Posted: 16 Dec 2014 Last revised: 10 Oct 2015

See all articles by Andrew Johnston

Andrew Johnston

Warwick Law School

Paige Morrow

UN Special Rapporteur for Freedom of Expression; Graduate Institute of International and Development Studies (IHEID); ARTICLE 19

Date Written: December 8, 2014


This paper supports the objective of the proposed revision of the Shareholder Rights Directive (Directive 2007/36/EC), that is, to contribute to the long-term sustainability of EU companies. However, it expresses concern that the measures being considered will not achieve their intended purpose, and worse, that they may have unintended negative consequences. The fundamental issue is that shareholder empowerment will not, on its own, improve corporate governance or contribute to sustainable growth in the EU.

Short-termism was one of the root causes of the financial crisis. It has not been adequately addressed to promote sustainable European growth over the long-term. Despite the Commission’s well-intentioned efforts, the proposed revision falls far short of addressing the underlying causes of short-termism so as to prevent future crises.

The current proposal relies exclusively on shareholders to drive the shift to a longer-term perspective. Especially after the financial crisis, there is no clear reason for this exclusive reliance on shareholders. Although shareholders have and should have specific rights in corporate governance, shareholders do not own companies. Their relationship with the company is a contractual one, just like that of creditors and employees. Moreover, shareholders differ considerably in their time frames and approaches. Some shareholders are committed to holding for the long-term, whilst others only hold for the short-term. It is important that the former group become more engaged; however, there is a danger that the proposed revision will further empower shareholders with a short-term orientation. For this reason, there is a need for further measures to complement the proposed revision and achieve the goal of a longer-term approach to corporate governance. The paper suggests minor changes to the proposal and canvasses some more far-reaching changes.

Suggested Citation

Johnston, Andrew and Morrow, Paige, Commentary on the Shareholder Rights Directive (December 8, 2014). University of Oslo Faculty of Law Research Paper No. 2014-41, Nordic & European Company Law Working Paper No. 15-13, Available at SSRN:

Andrew Johnston (Contact Author)

Warwick Law School ( email )

Gibbet Hill Rd.
Coventry, West Midlands CV4 8UW
United Kingdom

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Paige Morrow

UN Special Rapporteur for Freedom of Expression ( email )

Palais Wilson
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Geneva, 1201

Graduate Institute of International and Development Studies (IHEID) ( email )

PO Box 136
Geneva, CH-1211

ARTICLE 19 ( email )

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London, EC1R 1UQ
United Kingdom

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