Shareholder Interaction Preceding Shareholder Meetings of Public Corporations – A Six Country Comparison

This paper analyses the law on shareholders’ interaction in the period preceding the shareholder meeting. It asserts three contentions: First, it argues that the legal regimes in France and Germany provide for rights that facilitate shareholder monitoring without replacing the management, while the laws of Canada and the United States reduce the function of shareholder meetings to an institution dealing almost exclusively with change-in-control contests. The United Kingdom and Switzerland stand between these extremes, though the ownership structure within these countries may result in a practice that is (at least) as efficient in monitoring managers as that in France and Germany. Second, in analysing the question of why these differences exist, it is asserted that the inability of minority shareholders in the U.S. to exercise meaningful oversight reflects the U.S.-American assumption that capital markets are (semi-strong form) efficient. Canada, under the influence of the U.S. Securities Regulation, adopted similar rules, though Canadian idiosyncracies might have supported a different kind of regime. In contrast, in France and Germany, weak capital markets and relatively concentrated share ownership mandated that minority shareholders have the capacity to directly influence directors and large shareholders. Third, within the (significant) caveats of this study, this paper furthers the assertion that (minority) shareholders in French and German firms may rely on a meeting-centered, explicit system of shareholder rights. In contrast, U.S. and Canadian law relies on implicit influence through market forces. The study, which focuses on statutory provisions, does not allow for meaningful statements with respect to British and Swiss corporations.