One Share - One Vote: A European Rule?

32 Pages Posted: 25 Jan 2006

See all articles by Guido Ferrarini

Guido Ferrarini

University of Genoa - Law Department and Centre for Law and Finance; European Corporate Governance Institute (ECGI)

Multiple version iconThere are 2 versions of this paper

Date Written: January 2006


In this paper, I tackle the question whether one share - one vote should become a European law rule. I examine, first of all, the economic theory concerning one share - one vote and its optimality, and the law and economics literature on dual class recapitalizations and other deviations from one share - one vote. I also consider the agency costs of deviations from one share - one vote and examine whether they justify regulation. I subsequently analyze the rules implementing the one share - one vote standard in the US and Europe. In particular, I analyze the self-regulatory rules of US exchanges, the relevant provisions of the European Takeover Directive (including the well known break-through rule), and the European Court of Justice's position as to golden shares (which also are deviations from the one share - one vote standard). I conclude that one share - one vote is not justified by economic efficiency, as also confirmed by comparative law. Also the European breakthrough rule, which ultimately strikes down all deviations from one share - one vote, does not appear to be well grounded. Only transparency rules appear to be justified at EU level as disclosure of ownership and voting structures serves a pricing and governance function, while harmonisation of the relevant rules reduces transaction costs in integrated markets.

Keywords: one share-one vote, corporate voting, non-voting shares, multiple-voting shares, golden shares, European Takeover Directive, break-through rule

JEL Classification: G32, G38, K22

Suggested Citation

Ferrarini, Guido, One Share - One Vote: A European Rule? (January 2006). ECGI - Law Working Paper No. 58/2006. Available at SSRN: or

Guido Ferrarini (Contact Author)

University of Genoa - Law Department and Centre for Law and Finance ( email )

Via Balbi, 22
16126 Genova, 16100
+39 010 209 9894 (Phone)
+39 010 209 9890 (Fax)


European Corporate Governance Institute (ECGI)

B-1050 Brussels


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