{"title":"Loyalty Shares: an International Perspective. A Suitable Instrument to Fight Short-Termism?","authors":"I. Torres","doi":"10.1515/ecfr-2022-0018","DOIUrl":null,"url":null,"abstract":"Abstract 556 The Act 5/2021, April the 12th, that modifies the Spanish Companies Act, approved by Royal Legislative Decree 1/2010 of 2nd July (“LSC”) goes beyond the Transposition of Directive 2017/828 and introduces ex novo “loyalty shares” within the Spanish Companies Act (Official Journal, April 13th). This novelty is an evolution in the corporate legislation, the purposes of which is to encourage long-term ownership. Under the self-explanatory heading “Additional loyalty votes”, the law implementing Directive 2017/828/EC introduces a set of rules (Arts. 527 ter to 527 undecies) fundamentally equipollent to the ones already in place in both France and Italy and, more recently, in Belgium. According to the preamble to the Bill, long-term ownership is a new concept promoted by policy makers (including the European Commission), some institutional investors, stakeholders and even issuers who have been facing for a while an increasing pressure to maximize short term results. Against this background, the question that immediately arises (duly discussed in this paper) is whether loyalty shares really promote long-term ownership. More intriguingly, the question is whether short termism is really a problem for listed corporations. The short term vs. long term dichotomy has led us to analyse the rise of the prominent role played by “activist” investors. If short termism exists, are loyalty shares the proper mechanism whereby a real change can really materialise? Moreover, are these new instruments the right solution to overcome the entrenched shareholder apathy and, therefore, the key to achieve their engagement?557","PeriodicalId":54052,"journal":{"name":"European Company and Financial Law Review","volume":null,"pages":null},"PeriodicalIF":1.3000,"publicationDate":"2022-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"European Company and Financial Law Review","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1515/ecfr-2022-0018","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"LAW","Score":null,"Total":0}
引用次数: 0
Abstract
Abstract 556 The Act 5/2021, April the 12th, that modifies the Spanish Companies Act, approved by Royal Legislative Decree 1/2010 of 2nd July (“LSC”) goes beyond the Transposition of Directive 2017/828 and introduces ex novo “loyalty shares” within the Spanish Companies Act (Official Journal, April 13th). This novelty is an evolution in the corporate legislation, the purposes of which is to encourage long-term ownership. Under the self-explanatory heading “Additional loyalty votes”, the law implementing Directive 2017/828/EC introduces a set of rules (Arts. 527 ter to 527 undecies) fundamentally equipollent to the ones already in place in both France and Italy and, more recently, in Belgium. According to the preamble to the Bill, long-term ownership is a new concept promoted by policy makers (including the European Commission), some institutional investors, stakeholders and even issuers who have been facing for a while an increasing pressure to maximize short term results. Against this background, the question that immediately arises (duly discussed in this paper) is whether loyalty shares really promote long-term ownership. More intriguingly, the question is whether short termism is really a problem for listed corporations. The short term vs. long term dichotomy has led us to analyse the rise of the prominent role played by “activist” investors. If short termism exists, are loyalty shares the proper mechanism whereby a real change can really materialise? Moreover, are these new instruments the right solution to overcome the entrenched shareholder apathy and, therefore, the key to achieve their engagement?557
期刊介绍:
In legislation and in case law, European law has become a steadily more dominant factor in determining national European company laws. The “European Company”, the forthcoming “European Private Company” as well as the Regulation on the Application of International Financial Reporting Standards (“IFRS Regulation”) have accelerated this development even more. The discussion, however, is still mired in individual nations. This is true for the academic field and – even still – for many practitioners. The journal intends to overcome this handicap by sparking a debate across Europe on drafting and application of European company law. It integrates the European company law component previously published as part of the Zeitschrift für Unternehmens- und Gesellschaftsrecht (ZGR), on of the leading German law reviews specialized in the field of company and capital market law. It aims at universities, law makers on both the European and national levels, courts, lawyers, banks and other financial service institutions, in house counsels, accountants and notaries who draft or work with European company law. The journal focuses on all areas of European company law and the financing of companies and business entities. This includes the law of capital markets as well as the law of accounting and auditing and company law related issues of insolvency law. Finally it serves as a platform for the discussion of theoretical questions such as the economic analysis of company law. It consists of articles and case notes on both decisions of the European courts as well as of national courts insofar as they have implications on European company law.