One Share One Vote (2007)

One Share One Vote (2007)

This page provides an archive of the study undertaken by ECGI researchers in 2007.


    A study commissioned by the European Commission into the proportionality between ownership and control in EU listed companies
    As this study has now been completed, the website will no longer be updated. Consequently, some information will become out-of-date

    Background | Final Report | ECGI team and roles | Resources | Announcements 


    The Tender

    In April 2006, the Directorate-General for Internal Market and Services of the European Commission invited tenders (MARKT/2006/15/F) for an external study into the proportionality between ownership and control in EU listed companies. The objectives of this study are:

    to identify existing deviations from the proportionality principle across EU listed companies;
    to analyse the relevant regulatory framework at Member State level;
    to evaluate their economic significance and whether such deviations have an impact on EU financial investors.

    The winning consortium

    In August 2006, a contract to undertake the study was awarded to the winning consortium comprising:

    Institutional Shareholder Services Europe (ISS Europe) is the European wholly-owned subsidiary of Institutional Shareholder Services (ISS), which is the world’s leading provider of proxy voting and corporate governance services with over 20 years of experience. In May 2005, ISS acquired Deminor Rating, a prominent European corporate governance consultancy. ISS Europe will serve as the main contractor in the identify existing deviations from the proportionality principle across EU listed companies;
    Shearman & Sterling LLP (S&S) is a well-known international law firm with approximately 1,000 lawyers in 19 offices around the world, and more than 300 lawyers across eight offices in Europe. S&S will serve as a sub-contractor in the tender.
    The European Corporate Governance Institute (ECGI) is a recognised international scientific association of over 80 research fellows and associates. Its mission is to improve corporate governance through independent scientific research and related activities. ECGI will serve as a sub-contractor in the tender.

    Shareholder's rights

    Proportionality between capital and control

    From the European Commission's website (click here for the original source)

    In its May 2003 Action Plan on Company Law and Corporate Governance, the Commission proposed to carry out a study on the deviations from the principle of proportionality between capital and control existing in the Member States of the European Union. Stakeholders confirmed the need for such a study in their response to the Spring 2006 consultation conducted on the future priorities of the Action Plan.

    The study commissioned in September 2006 was led by Institutional Shareholder Services (ISS), associated to a European network of leading academics, the European Corporate Governance Institute (ECGI) and the law firm Shearman & Sterling. The study provides a useful factual background to the issue of proportionality between capital and control, or the "one share, one vote" issue as it is more commonly referred to.

    The report is accompanied by detailed surveys of the academic literature and of the empirical evidence on the "one share -one vote " issue as well as by a detailed comparative legal study covering 16 Member States of the European Union as well as Australia, Japan and the US.
    Report on the proportionality principle in the European Union (Click here for copy in English)
    Academic Surveys
      - The One Share - One Vote Debate: A Theoretical Perspective by Mike Burkart, Stockholm School of Economics, CEPR, FMG and ECGI, Samuel Lee, Stockholm School of Economics (ECGI Finance Working Finance Working Paper No. 176/2007)
      - One Share, One Vote: The Empirical Evidence by Renée Adams, University of Queensland and ECGI, Daniel Ferreira, London School of Economics and Political Science and ECGI (ECGI Finance Working Finance Working Paper No. 177/2007)
    The Comparative Legal Study
      The synthesis
      Exhibit A - Methodology
      Exhibit B - Regulatory framework for control-enhancing mechanisms: summaries
      Exhibit C - Part I - Legal study for each jurisdiction
      Exhibit C - Part II - Legal study for each jurisdiction

    The ECGI team and roles

    The ECGI will make academic contributions to the study. The ECGI make team will consist of a core team, a correspondent network, a legal scholar network with a lead legal scholar, a scientific committee, the ECGI’s Executive Director and an independent ECGI board member from the business side who will conduct a general review. 

    The core team
    This will consist of four financial economists who will review the theory and econometric studies:

    Empirical survey team: Professor Renée Adams (Stockholm) and Dr Daniel Ferreira (Lisbon) will draft an empirical literature survey that will describe the objectives and function of each deviation from the proportionality principle identified in Part A of the deliverables from an empirical point of view. The team will also review the existing research and literature as to whether there are any indications that deviations from the proportionality principle are statistically relevant related to the performance of companies. The authors will also review the empirical literature for the United States, Brazil, Australia and – drawing on the correspondent network – for selected other non-EU jurisdictions.
    Theory survey team: Professor Mike Burkart (Stockholm) and doctoral candidate Samuel Lee (Stockholm) will describe the objectives and functions of deviations from the proportionality principle from a theoretical point of view.

    Correspondent network 
    The work of the core team will be supported by a correspondent network drawn from the ECGI’s research members from law, economics and finance. The correspondent network will provide comments and input for the core teams and other aspects of the study. It will also serve as an “intelligence network” that will supplement the bibliographic database tools used to ensure that the empirical literature survey is comprehensive. The network has a strong multidisciplinary representation, providing an excellent coverage also of non-EU jurisdictions, in particular the jurisdictions that will be analyzed by ISS and S&S, the United States, Japan and Australia.

    Legal scholar network 
    ECGI will also support the work of ISS and, in particular, S&S through a legal scholar network. The network will be led by Luca Enriques (Bologna University). Professor Enriques will coordinate the input of the legal scholar network to the list of deviations from the proportionality principles, the description of the regulatory framework and the comparison with the situation in key jurisdictions outside the EU. The network will ensure independent quality control and provide specific and general comments on the relevant contributions from the ECGI, ISS and S&S teams.

    Scientific Committee
    The work of the drafting teams and the networks will be overseen by a scientific committee composed of Professors Colin Mayer (Economics and Finance, Oxford), Julian Franks (Accounting and Finance, London Business School) and Joe McCahery (Law, Amsterdam).

    ECGI team co-ordination
    The general coordination of ECGI’s contribution will be ensured by ECGI’s Executive Director, Marco Becht (Economics and Finance, ECARES, Université Libre de Bruxelles). Becht is also a member of the scientific committee.

    Independent review
    The ECGI teams’ work will be subject to a general review by a non-academic, independent board member of the ECGI, Leo Goldschmidt (former Managing Partner, Banque Degroof).

    Project Resources

    This section contains information and links to resources that are relevant to the ECGI team for the duration of the study. Where possible, these are available in the public domain, but some documents and facilities are restricted to team members only. For any enquiries concerning this section, please contact the ECGI webmaster.

    Press release announcing the award of the Contract
    Restricted area for Network members
    Network Members should click here to enter the restricted area


    European Commission (Click here for original source)
      The following is the text of the European Commission announcement on the publication of the study on 4 June 2007.
    Commission publishes external study on proportionality between capital and control in EU listed companies

    The European Commission has published an external study on the question of proportionality between ownership and control in EU listed companies. The study finds that, on the basis of the academic research available, there is no conclusive evidence of a causal link between deviations from the proportionality principle and either the economic performance of listed companies or their governance. However, there is some evidence that investors perceive these mechanisms negatively and consider more transparency would be helpful in making investment decisions. The study was carried out by Institutional Shareholder Services Europe (ISS Europe), the European Corporate Governance Institute (ECGI) and the law firm Shearman & Sterling LLP.

    Internal Market and Services Commissioner Charlie McCreevy said: "The study provides a useful factual background to the issue of proportionality between capital and control – known as the "one share, one vote" issue. Previously we didn't have a clear picture of how this issue affects European listed companies and whether it has an impact on their economic performance. Now that these facts are on the table we will examine, with an open mind, the question of whether there is a need for Commission action in this field".

    The study will provide input for an impact assessment that the Commission will be carrying out between now and autumn 2007.


    The study was commissioned in September 2006, following a public consultation carried out between December 2005 and March 2006 on future priorities in company law and corporate governance that confirmed the need for additional information on the factual situation in the EU regarding the issue of proportionality between capital and control. The objective of the study was to identify existing deviations from the proportionate allocation of capital and control across EU listed companies, and to evaluate their economic significance and whether such deviations have an impact on EU financial markets.

    The objective was to obtain a picture that would be as comprehensive as possible. The scope of the study was therefore defined very broadly. It encompasses the review of such mechanisms as multiple-voting rights, voting caps and non-voting preferential shares, as well as of tools such as shareholders' agreements, cross-shareholdings and company pyramids.

    The study scrutinizes the regulatory framework in 19 jurisdictions (including 3 from outside the European Union) and examines the situation of 464 listed European companies. The study also consists of a review of the available academic literature and empirical evidence on the proportionality principle as well as a survey of institutional investors whose objective is to assess what role the proportionality principle plays in their investment decision.

    See FAQs (frequently asked questions) MEMO/07/222

    Consortium Press Release (Click here for original source)
      The following is the text of the OSOV announcement on the publication of the study on 4 June 2007.

    Institutional Shareholder Services (ISS), Shearman & Sterling LLP and the European Corporate Governance Institute (ECGI) submitted the results of a Study on proportionality between ownership and control in EU listed companies to European Commission

    After nine months of research, the facts and figures on proportionality between ownership and control were submitted to the European Commission by ISS and its partners Shearman & Sterling and the ECGI.

    Last year, the European Commission commissioned a research report to understand an important corporate governance issue: the proportionality between ownership and control. This study is part of the Commission’s efforts to base any policy initiatives it might wish to take in this area on objective data. As Charlie McCreevy, European Commissioner for Internal Market and Services, said at the time of the launching of the initiative “The study represents the essential starting point for any further discussion on the adequacy of control to capital. It will provide a full, systematic picture of the essential features of Corporate Europe that the European public opinion is waiting for. Any discussion about how to move on, about possible initiatives in this area, needs to be based on sound facts.”

    Those facts are now on the table. Some highlights of the Study, which covers nineteen countries, are:

    - All countries allow Control Enhancing Mechanisms (“CEMs”) from a legal point of view.
    - A wide variety of protective mechanisms are available to shareholders in companies featuring CEMs.
    - Not all companies use CEMs, even though they might be available. 44% of companies in the sample feature one of more CEM.
    - The review of academic research shows that there is no theoretical or empirical basis for encouraging or discouraging CEMs in general at this stage. Regulation must take into account the specific circumstances in which a CEM is or might be used.
    - The countries with the highest proportion of companies featuring at least one CEM are France, Sweden, Spain, Hungary and Belgium, which all have a majority of companies featuring CEMs.
    - Recently listed companies have fewer CEMs than large companies. This means fewer occurrences of CEMs but also fewer combinations of CEMs
    - Investors say they mostly perceive Control Enhancing Mechanisms negatively. According to most investors, this influences investment decisions. 80% of investors in the sample expect a discount ranging from 10% to 30% of market price.

    “For ISS, this Study will have been a success if it contributes to shedding more light on the subject of proportionality and to fostering more transparency in the market place, for the benefits of listed companies as well as shareholders,” said Jean-Nicolas Caprasse, Managing Director of ISS Europe. “I’m convinced this objective has been achieved.”

    “This is the first time a study surveys the potential availability of Control Enhancing Mechanisms and protective legal devices in nineteen jurisdictions. It shows that a broad range of mechanisms is available in most countries, even when they have different legal traditions”, said Christophe Clerc, European Counsel at Shearman & Sterling. “All countries apply the freedom of contract principle to varying degrees.”

    Marco Becht, Executive Director of the ECGI said: “The ECGI is very pleased that independent research is having such a significant influence on the governance debate. This study shows CEMs are complex and deserve serious reflection. It is the first step towards systematic stocktaking and evaluation of the proportionality between ownership and control in EU listed companies, based on European data and realities.”

    For further information:
    - about ISS, contact Christel Dumas - T +32 2 674 7667 - Email
    - about Shearman & Sterling LLP, contact Emmanuel Gaillard, Managing Partner - T +33 1 53 89 70 00 - Email
    - About the legal study, contact Christophe Clerc, European Counsel - T +33 1 53 89 70 00 - Email
    - about ECGI, contact Marco Becht - T +32 2 650 4466 - Email

    Consortium members

    Go to the ECGI website

    Go to the ISS website

    Go to the Shearman & Stirling website