LUXEMBOURG Law and Practice Contributed by: Marcus Peter and Kate Yu Rao, GSK Stockmann SA
conversions, mergers and divisions within the EU, shareholders who vote against the approval of the draft terms have a right to exit and receive cash com - pensation. In general, activist shareholders can be motivated by both financial and non-financial objectives, which can be linked to either the short-term or long-term vision of their investment. Shareholder activism carried out for financial objec - tives is more commonly linked to the short-term vision of investors. Such shareholder activism is gener - ally applied by activist shareholders using aggressive methods that are aimed at challenging the economic performance of the company, such as cost-cutting and capital allocations (in the form of share redemptions or the payment of dividends), as well as speculative methods (such as short-selling and lending shares) to put pressure on the share market price. The purpose of these transactions is to generate significant volatil - ity that paralyses capital transactions.
Shareholder activism carried out for non-financial reasons is normally linked to the long-term vision of investors. This is a relatively recent trend and is in line with the latest legislative developments on the encouragement of long-term shareholder engagement as incorporated into the Shareholder Rights Law. As a result, there has been a change in investment con - siderations over the last few years. Shareholders have evolved from having only a short-term view of invest - ment governed by financial considerations to having a long-term view of investment governed more by non-financial considerations involving all stakehold - ers. This development can be seen in the increasing integration of non-financial factors, such as ESG and sustainability-related consideration, in investment and governance policies. 11.2 Aims of Activists See 11.1 Shareholder Activism . 11.3 Interference With Completion Activists have been seen to attend general meetings of shareholders and ask questions about transactions. However, this is common practice and companies deal with these questions in a professional manner.
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