The Rise of Long-Term Minority Shareholders' Rights in Publicly Held Corporations and Its Effect On Corporate Governance

To promote a smooth and effective exercise of minority shareholders’ rights attached to voting shares in publicly held companies, some regulators and law-makers have recently enacted provisions granting key rights only to minority shareholders who have been continuously holding a stake for a minimum holding period (“long-term shareholders”). This article argues that making certain shareholder rights dependent on continuous ownership is a good way of developing corporate governance because it helps management to act in the long-term interest of the company. In other words, fostering long-term shareholders’ activism may be a tool for strengthening the long-term best interest of the corporation because it allows directors to manage their enterprises in a manner that emphasises the long-term over the short-term. This article also explores whether the new laws and regulations have an impact on the shareholders’ equal treatment norm and briefly addresses certain practical issues that these new laws and regulations could raise.