Abstract:
The EC’s proposal to establish shareholder democracy and mandate the one share-one-vote rule (hereinafter referred to as 1S1V) has drawn much attention and controversy. In the pursuit of a popular appeal for the rule, EC policy-makers have tried to make equiproportional representation nearly an aphorism tied with corporate egalitarian sentiments underscoring justice, fairness and ethics.
Against this background, the question of “who could be against or oppose shareholder democracy and the 1S1V” has both positive and normative implications. Based on law, finance and economics literature, this article evaluates economic underpinnings and efficiency of the 1S1V and concludes that it is generally a suboptimal corporate voting mechanism compromising economic efficiency and distorting incentives of corporate constituencies.
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