Controlling shareholders and their duties

In virtually all developed jurisdictions, including in Europe and in the U.S., controlling shareholders have certain duties toward minority shareholders and, potentially, the corporation and/or other stakeholders (especially creditors, at least in specific circumstances). To a minor degree, this might be true generally of all shareholders, which might have duties toward their fellow co-adventurers. In the Anglo-Saxon world and in common law systems, these duties fall primarily under the category of “fiduciary duties, " an expression that does not recur in the civil law tradition. While the specific legal tools and rules used might differ in different traditions, the underlying substantive concepts, and specifically the fact that under certain conditions controlling shareholders owe duties of loyalty, good faith and possibly - but this is more uncertain - care to fellow investors, exist in most modern corporate governance systems. With a rough simplification, these fiduciary duties are different in both nature and intensity from the ones owned by directors. The historical roots and sources of these duties, as well as the legal techniques used to establish and enforce them, differ, sometimes significantly, in different systems, and these differences have both theoretical and practical implications. Nonetheless, when we consider the law in action and go beyond labels and forms, we find functionally similar principles. Divergence among jurisdictions is more a matter of degree and intensity of protection of minority shareholders (and other stakeholders), types of remedies, and burden of the proof, rather than the expression of a radically different conceptual framework. The chapter explores these differences and similarities focusing on major European jurisdiction and the U.S., comparing and contrasting the specific rules and trying to look at the underlying rationales and concrete effects of the different legal traditions.