Required reading

1. EU: Directive 2007/36/EC, arts. 2(a), (c) and 4

2. D: AktG, §§ 53a, 101(1), 103(1), 119, 120(1), 122, 133, 134, 179(1), 182(1), 186(3), 262(1), 293(1)

3. UK: CA 2006, secs. 21, 22, 160, 168, 188, 190(1), 282, 283, 303, 314, 338, 339, 416(3), 439(1), 467(1), 489(4), 527, 551, 907(1), 922(1)

4. US: DGCL, §§ 211(b), 212, 214, 221, 228(a), 242(b), 251(c), 271(a), 275(c)

Why and on what do shareholders vote?

A shareholder's options: exit or voice?

Regardless of the law applicable to a corporation, a shareholder who has concerns about a company's management has two choices: sell the shares or voice the concerns. The concept pair “voice” and “exit” come from Professor Albert O. Hirschman's 1970 volume, Exit, Voice and Loyalty, and are standard categories for discussing the options of shareholders confronted with poorly managed companies. Exit is an “economics” solution, like switching bakeries when the bread is stale, while voice is a “political” solution, like voting for a more responsive government official. The action one tends to take is greatly determined by the nature of the relationship, and voice and exit tend to be inversely related. Where high barriers to exit are combined with free use of voice, such as (often is the case) in a family, the use of voice increases and that of exit decreases.