Shareholders' Meeting and the Internet: Information - Communication - Decision
33 Pages Posted: 17 Jan 2005
Date Written: December 27, 2004
This paper in German language examines the impact of the internet on shareholder meetings. The author describes the steps that the German legislature has been taken towards a shareholder meeting that is based primarily on the internet, rather than the personal attendance of shareholders (as in Germany today), or a merely formal procedure (as in the U.S. today).
He finds that much has been done, but more needs to be done: Traditionally, German shareholder meetings fulfill three functions: shareholders should receive information, they should communicate among each others and discuss with the board of management, as well as the supervisory board, and, finally, they should decide (voting). Strike suits, apathy of (apparently rational) foreign investors, and a lack of skill of small investors exposed the traditional concept of shareholder meetings to criticism, and drive the shareholder meeting towards a merely formal, voting-oriented procedure - a development, which we observed - f.e. - in the U.S. as well.
The author holds that the internet provides solutions to these problems. He draws an idealistic picture of a legal environment that is based on a totally virtual shareholder meeting (though the expression itself might not fit anymore in the future): all shareholders will have equal access to internet-based information. Communication among shareholders and with the board will become more relevant in internet-based discussion forums than they are in a world, in which institutional shareholders look for informational advantages, small shareholders look for private benefits, and managers look for a way to avoid clear statements vis-a-vis shareholders. A merely internet-based, cross-border voting will represent a higher proportion of shareholders than today. The might of the net will help bind managers and shareholders to the interests of the firm.
Note: Downloadable document is in German.
Keywords: Shareholder meeting, internet, virtual shareholder meeting, proxy voting, Germany, reforms
JEL Classification: M1, K22, G30
Suggested Citation: Suggested Citation