One share - one vote : a european rule?
- 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.
Author: | Guido A. Ferrarini |
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URN: | urn:nbn:de:hebis:30-27628 |
URL: | http://www.ilf-frankfurt.de/uploads/media/ILF_WP_047.pdf |
Parent Title (German): | Working paper series / Johann-Wolfgang-Goethe-Universität, Institute for Law and Finance ; 47 |
Series (Serial Number): | Working paper / Johann-Wolfgang-Goethe-Universität, Institut for Law and Finance (47) |
Publisher: | Inst. for Law and Finance |
Place of publication: | Frankfurt am Main |
Document Type: | Working Paper |
Language: | English |
Year of Completion: | 2006 |
Year of first Publication: | 2006 |
Publishing Institution: | Universitätsbibliothek Johann Christian Senckenberg |
Release Date: | 2006/06/12 |
Tag: | European Takeover Directive; break-through rule; corporate voting; golden shares; multiple-voting shares; non-voting shares; one share-one vote |
Note: | JEL Classifications: G32, G38, K22 |
HeBIS-PPN: | 188743219 |
Institutes: | Rechtswissenschaft / Rechtswissenschaft |
Dewey Decimal Classification: | 3 Sozialwissenschaften / 34 Recht / 340 Recht |
Licence (German): | Deutsches Urheberrecht |