Shareholder Primacy and Property Rights Connected to Shareholding

Abstract

The Study on Directors’ Duties and Sustainable Corporate Governance (hereinafter ‘The Study’) was published on 30 July 2020 and is accompanied by a Commission Inception Impact Assessment and a consultation deadline of 8 October 2020. This is an add-on to the response given by a group of Nordic company law scholars and focuses on shareholder primacy as a binding legal rule and on the property rights connected to shareholding.
‘The Study’ displays a lack of understanding of the nature of legal discourse and presents a biased, unrepresentative and highly politically motivated survey of literature and empirics as shown in the response from the group of Nordic Company Law scholars. In addition we find that ‘The Study’ shows a total lack of knowledge in regard to shareholder primacy. ‘The Study’ claims that shareholder primacy is just a social norm, which could easily be removed; but in fact shareholder primacy is the most important part of shareholding and therefore of the property rights connected to shareholding. Removing shareholder primacy would not only be a violation of the shareholders’ property rights, it would also be a fundamental change in Company Law. Rules on shareholder primacy has been in force almost since company law was invented as a separate legal area. The property rights connected to shareholding are also protected by the European Convention of Human rights. Therefore, removing shareholder primacy can only be done in compliance with rules on expropriation.

Keywords: Directors duties, sustainable corporate governance, shareholder primacy, property, European Convention on Human Rights

JEL Classification: K11, K22, K33