The AGM in Europe: Closing the gap between theory and practice

Corporate law presumes that the Annual General Meeting of shareholders (‘AGM’) plays a pivotal role in mitigating agency problems, but its functioning is subject to fierce criticism. This includes shareholder absenteeism, sidestepping by large shareholders and lack of dialogue. Some experts call AGMs ‘dull rituals’ that are ‘obsolete’, whilst others advocate enhanced shareholder rights. The European Commission is clearly in favour of shareholder empowerment with its 2014 proposal to amend the Shareholder Rights Directive (Directive 2007/36/EC) including a European Say on Pay, which was formally adopted in spring 2017 as Directive (EU) 2017/828. The conflicting viewpoints raise extremely important, but unanswered questions and extensive research to explore the functioning of the AGM in practice is lacking, making this book extremely relevant. This book combines empirical legal and economic research to study the role of AGMs in Europe in seven European Member States, finally shedding light on an under-studied subject; the determinants of shareholder participation. The results show, inter alia, that in contrast to what economic theory suggests, a substantial and increasing number of small shareholders participate in AGMs and that legal rules can influence shareholder participation. Nonetheless, AGMs can still be improved and therefore this book provides some clear policy implications