Required reading

1. EU: Transparency Directive, arts. 9–13

2. D: WpHG, §§ 21, 22; AktG, §§ 20, 21

3. UK: CA 2006, secs. 791–797; FSA Disclosure and Transparency Rules, Rule 5

4. US: Exchange Act, §§ 13(d), 16(a); Exchange Act Rule 13d-1, 13d-3, 16a-2, 3, 6

The fiduciary and reporting duties of shareholders

In the preceding three chapters, we discussed shareholder rights and how they are exercised. Shareholders have the right to vote on important decisions affecting the company and to receive information on which to base their voting decisions. Voting takes place primarily in general meetings, which must be called and held in certain ways to ensure transparency and fairness. In this chapter, we examine shareholder duties. Here, we will look at the duty to disclose large shareholdings and to exercise voting power with a certain degree of loyalty vis-à-vis the shareholders affected by this power. In the next chapter, we will discuss how minority shareholders can have recourse to court to defend rights that they are not able to protect in the general meeting because of the insufficiency of their voting power.

The duties discussed in this chapter fall into two quite different categories. On the one hand, courts have developed duties that apply to limit the power which shareholders have under the law. These duties resemble the duty of loyalty that applies to corporate directors.