Why shareholder voting is not a duty but a right

Résumé du document

Paradoxically, we daresay, most part of the contemporary continental literature on company law refers to the shareholder's right to vote, but treats vote as a duty. Perhaps a reminiscence of the traditional approach to companies, voting is instinctively placed near such other corporate rights as the right to be informed or to receive dividends, but is afterwards denied its nature of a right and is transformed into a duty.

This line of thought finds its ultimate expression in certain countries in laws that have imposed an obligation on all companies managing UCITS to exercise their voting rights in the general meetings of the managed undertakings. Take, for instance, the case of Art. L. 533-4 of the Financial Security Law of France, that obliges portfolio management companies to "[e]xercise the rights attached to the securities held by the undertakings for collective investment in transferable securities which they manage, in the exclusive interest of the shareholders or unitholders of those undertakings for collective investment in transferable securities, and report on their practices in regard to exercise of the voting rights as determined in the General Regulations of the Financial Markets Authority. In particular, if they do not exercise those voting rights, they shall explain their reasons to the unitholders or shareholders of the undertakings for collective investment in transferable securities".

Extraits

[...] Alain Leygonie, Revue des sociétés 2007, p L. GODON, Intensification du devoir de loyauté du dirigeant envers les associés lors d'une opération de cession de droits sociaux. Note sous Cour de cassation (com.) 6 mai 2008, Häni Consorts Pauchard, Revue des sociétés 2009, p Ph. BISSARA, Corporate governance, loi NRE et redéfinition de la faute civile des dirigeants: le point de vue du dirigeant d'entreprise Revue des sociétés 2003, p. 210. [...]

[...] The gathering of more individuals in order to set up a legal entity is purely voluntary. For their part, it involves both acquiring rights and undertaking obligations, the latter also representing a voluntary act of restricting their freedom. This idea has also been emphasized by the European Court of Justice, which, in its judgment of 10 March 1992, Powell Duffryn plc v Wolfgang Petereit[9], has taken the view that links between the shareholders of a company are comparable to those between the parties to a contract. [...]

[...] DEBOISSY, Droit des sociétés éd., Litec Publishing House L. GEORGESCU, Drept comercial român, Vol. II, All Beck Publishing House, Bucharest p M. REIMANN, J. ZEKOLL, Introduction to German Law, 2nd Revised edition, Kluwer Law International Publishing House St. D. C?RPENARU, Drept comercial român, 6th edition, Universul Juridic Publishing House, Bucharest Y. GUYON, L'acquisition de la qualité d'associé suppose une manifestation de volonté se traduisant par l'acquisition de droits sociaux, Revue des sociétés 1993, p P. LEDOUX, Le droit de vote des actionnaires, LGDJ, Paris Gh. [...]

[...] They thus enshrine a proportionality ratio between the shareholder's power within the company (dependent upon the number of votes that she or he holds) and the corresponding risk incurred due to the investment in a company's capital (the equity share held). Risk becomes the basis and the extent of the shareholder's voting right[12]. Shareholders are free, accordingly, to exercise their right to vote in their own interest (of course, subject to an abusive exercise) and in proportion to that interest. As it was shown in legal literature[13], how else could one be persuaded to take a significant financial risk in a business, if not in exchange for the right to decide what is in his or her interest? [...]

[...] when the shareholders have not paid their promised contributions to the registered capital”[22]. In our opinion, this is the right solution. Since a suspension restricts a fundamental right of the shareholders, it can only be imposed by the legislature and not pursuant to a statutory clause or a decision of a corporate body. Given the exceptional nature of the provisions concerning the suspension of the voting rights, they remain of strict interpretation, limited to the cases expressly provided by the legislature. [...]