8.2 Chapter 2 – The position of shareholders in a private limited company

Shareholders are a special type of stakeholder because their shareholder rights enable them to exercise far-reaching influence within the company, both inside and outside the general meeting. A shareholder can be characterised as the owner of the company, as a residual claimant and as a principal (pars. 2.3.3-2.3.5). These are qualifications which, from a legal-economic perspective, explain why shareholders must have control rights and thus be able to exercise (far-reaching) influence within the company. Although the qualifications are not entirely pure, they do show that shareholders occupy a special position within the company.

Shareholders can frustrate a preventive restructuring by exercising their rights, for example by voting in the general meeting against a share issue that is necessary in the context of a debt for equity swap. I explain in pars. 2.5-2.6 which control rights and financial rights attached to a share can play a role in a preventive restructuring. In exercising his rights, a shareholder may, in principle, put his own interests first. This will lead to problems when his interest does not coincide with the interests of the company, co-shareholders or other stakeholders. In certain circumstances, however, a shareholder may not pursue only his own interest. His actions are limited. Exactly which interests he must observe differs per jurisdiction (par. 2.7). In the Netherlands, for example, interest-group pluralism comes first (stakeholder model), whereas in England and the German GmbH the interests of shareholders come first (shareholder model). In all three countries, the most important circumstance for determining which interest the shareholder has to serve is the same, i.e. the extent to which a shareholder can exercise influence within the company. In the Netherlands this is based on the principles of reasonableness and fairness, in England in particular good faith, and in Germany the Treuepflicht. In chapters 4-6 I assess these limits for shareholders’ actions in more detail, in case the company is in financial distress and a preventive restructuring is appropriate.