Focussing on the Long-term Interests of Shareholders (Directive)

The Commission wants decisions by stock companies to be based to a greater extent on long-term performance and less on short-term share price fluctuations. It therefore proposes measures aiming to ensure that decisions by stock companies take more account of shareholders' interests.


The management boards of stock companies do not always act in the interests of the shareholders in the short term. To prevent this, shareholders should exercise extensive supervision of management. Many shareholders refrain from this because their vote has very little influence and their information costs are therefore too high (rational apathy). Obligations to obtain approval of shareholders for decisions on on remuneration of the management and on related-party transactions may, on the one hand, allow shareholders to assert their interests more easily. On the other hand, this threatens to encroach on entrepreneurial flexibility. The duty for proxy advisors to guarantee that their recommendations are "accurate and reliable" may result in their making only vague recommendations or even none at all.