In the post-financial crisis regulatory reforms, emphasis has been placed on creating recovery and resolution frameworks for banks, which ensure that the costs of failure are born by private parties (primarily shareholders), instead of taxpayers and the wider economy. Supervisors have (or will have) extensive powers on banks, e.g. to remove and replace directors, to appoint “special managers”, to transfer shares and assets of banks to third parties, and even to cancel existing shares and issue new shares in order to “replace” existing shareholders. The purpose of this article, Bank Recovery and Resolution: What About Shareholder Rights?, is to examine the potential impact of bank recovery and [1] and of the United Kingdom (the special resolution regime for banks established by the Banking Act of 2009).

The article begins by studying the rationale for shareholder protection, especially in the banking sector. It subsequently studies the main shareholder rights, which include: property rights, governance rights (including pre-emption rights, appointment of directors and involvement in management), procedural rights, protection of minority shareholders, and protection of shareholders in banking groups (through the principles of separate legal personality and limited liability).

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