Shareholder Democracies

This book offers a succinct, practical guide for understanding what some have referred to as shareholder democracy--efforts to facilitate and increase shareholder voting power within the corporation. In the past few years there has been a surge in shareholder activism that has had a profound impact on the corporation. Shareholders and other activists have sought to increase shareholders' voting power within the corporation based largely on the belief that increasing shareholder power will increase director and officer accountability, thereby helping to curb corporate misconduct and improve corporate performance. However, there is intense debate regarding whether increased shareholder power can achieve such objectives and whether increased shareholder power will negatively impact the corporation. This book is the first to provide a concise, but comprehensive look at the various ways in which shareholders have sought to enhance their voting power and influence within the corporation. In addition to examining shareholder activism, this book highlights and analyzes the debate regarding the propriety of increased shareholder power. This book also analyzes the impact of recent developments aimed at facilitating shareholder power such as majority voting, say on pay, and proxy access. This book will serve as a useful tool not only for those who desire a straight-forward analysis of shareholder rights and activism, but also for those seeking a reference guide on an issue of growing importance to corporate law and corporate governance.

And as they became more prevalent, the issue of internal governance became more pressing.

Shareholders have important rights, which they can exercise democratically at a company's general meeting, such as the power to control and supervise management of the company. The term 'shareholder democracy' relates to the different ways in which shareholders can influence or even determine a company's course of life. One of the disadvantages of shareholder democracy is a risk that most democratic systems face - it can lead to opportunistic behavior of, in this case, influential shareholders with personal interests which are not in line with the interest of the company. Globalizing financial markets call for a general debate of this topic in an international context. Shareholder democracy does not only play a part in takeover situations, it touches the very core of every company law system. The position of shareholders within the company model, for example, influences the corporate interest definition, which in turn has significant consequences for the position of the board of directors. This book places the topic of shareholder democracy in an international context and deals with the topic from a comparative point of view. It contains contributions from authors from various legal systems discussing the issue of shareholder democracy within their own jurisdiction. The book covers, among other topics, the power of shareholders in Germany, the UK, South Africa, Belgium, and the Netherlands.

Conventional wisdom warns that unaccountable political and business agents can enrich a few at the expense of many. But logically extending this wisdom implies that associated principals – voters, consumers, shareholders – will favor themselves over the greater good when ‘rules of the game’ instead create too much accountability. Democratic Governance and Economic Performance rigorously develops this hypothesis, and finds statistical evidence and case study illustrations that democratic institutions at various governance levels (e.g., federal, state, corporation) have facilitated opportunistic gains for electoral, consumer, and shareholder principals. To be sure, this conclusion does not dismiss the potential for democratic governance to productively reduce agency costs. Rather, it suggests that policy makers, lawyers, and managers can improve governance by weighing the agency benefits of increased accountability against the distributional costs of favoring principal stakeholders over more general economic opportunities. Carefully considering the fundamentals that give rise to this tradeoff should interest students and scholars working at the intersection of social science and the law, and can help professionals improve their own performance in policy, legal, and business settings.

This book investigates the assumptions that allow shareholders to align in voting decisions even in a context of severe market failures. The authors argue that the invisible hand of the market and the active hand of democracy can jointly bring about positive outcomes.

All over the world, companies play an important role in the economy. Different types of stakeholders hold the reins in these companies. An important class are the shareholders that finance the activities of these companies. In return, stakeholders have a say on how these companies should be organized and structure their activities. This is primarily done through voting and engaging. These mechanisms of voting and engaging allow the shareholders to decide significant aspects of the company structure, from who governs it to how much directors are paid. However, how shareholders vote and engage and how far their rights stretch are organized differently in different countries. This pioneering book provides insights into what rights these shareholders have and how the shareholders of companies in nineteen different jurisdictions participate in corporate life through voting and engaging. Comparative and international in scope, it pays particular attention to how jurisdictions align and differ around the world.