Shareholders Directive and its Impact on Corporate Governance

The Shareholders Rights Directive (SRD) and its Impact on Corporate Governance represents a key regulatory development in the European Union, aimed at enhancing shareholder engagement, transparency, and corporate accountability. This thesis evaluates SRD II’s role in strengthening governance frameworks, promoting institutional investor responsibility, and integrating Environmental, Social, and Governance (ESG) considerations into corporate decision-making. Key findings reveal that while SRD II has improved shareholder rights and corporate transparency, enforcement inconsistencies and passive investor engagement remain challenges. The directive has encouraged ESG integration, yet concerns over greenwashing and weak enforcement mechanisms limit its impact. Additionally, regional disparities in compliance across EU Member States have led to regulatory fragmentation. A comparative analysis with global governance frameworks, including the U.S. SEC disclosure regulations and Japan’s Stewardship Code, highlights areas where the EU can enhance its regulatory model. Moreover, the study examines emerging governance technologies, such as AI-driven ESG monitoring and blockchain-based shareholder voting, which could reshape corporate oversight. Given these challenges, the research proposes policy recommendations for SRD III, including stricter ESG compliance measures, binding shareholder rights on sustainability, and a centralized EU governance authority. These reforms would enhance enforcement, align governance with long-term sustainability, and ensure a more resilient corporate governance model. This thesis contributes to ongoing discussions by providing a comprehensive evaluation of SRD II’s impact and a forward-looking approach to future governance improvements.