Supranational regulation of exercising shareholders' rights in indirect holding systems

Abstract

The author focuses exercising rights attached to indirectly held shares. The paper discusses the current state of the supranational regulation in this field and proposes some necessary improvements in order to achieve a better protection of indirect investors. It begins with a brief elaboration of the nature and structure of indirect holding systems in the cross-border context. The main problems of enabling indirect investors’ influence on the way shareholders’ rights are exercised by the intermediary are also analyzed. The author argues that these problems should be tackled on a supranational level, which has been done in the EC Shareholders’ Rights Directive and the UNIDROIT Geneva Securities Convention. The core part of the paper contains a detailed analysis of the relevant provisions in these two documents and points out their limitations. It shows that the achieved level of harmonization or unification is insufficient to protect indirect investors, which is why these issues are in need of further supranational regulatory attention.