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Shareholder's rights are
embodied in the Company's Articles of Association and in English Law (mainly
by the Companies Acts). However these laws did not appear to have
anticipated the current situation where large companies can have hundreds of
thousands of shareholders, many of whom are effectively disenfranchised by
holding their shares in nominee accounts (go to the following page for
discussion on the particular issue of enfranchising nominee shareholders:
Share_Certificates_Nominees.) The main democratic
forum is a general meeting of the company (Annual or Extraordinary), but
again the law often does not reflect the realities of how these meetings
currently operate. Indeed, company law is often not specific about how
important matters should be dealt with, and leaves the director's of a
company wide discretion in many areas. The detail interpretation of many
parts of Company Law relies on legal precedents set by previous cases, which
may be few and ambiguous. Other aspects such as information disclosure are
covered by the Listing Rules and other FSA regulations, but even here
companies often seem to devise innovatory ways around them.
Another defect of
company law is that enforcing one's rights can be very expensive and also
impractical on other grounds. By the time you get a case to court, the issue
may be a dead one, and the likely benefits outweigh the costs of bringing
the case.
Some specific issues
regarding shareholder's rights are covered in the following note that
appeared in our Newsletter in 2002:
Shareholders_Rights.
Many other aspects of
this topic are covered in other pages of the "Policies" section. For
example, clearly shareholders as the owners of the business should have the
right to determine director's remuneration, the selection of board members,
when they are terminated and the severance terms, but that is not in
practice the case. Improved consultation on such matters has been introduced
in recent years, but there is still a long way to go to create a real
shareholder democracy.
A good overview of the original
objectives of UKSA, some of which have been subsequently implemented, is
given in the following document:
Prolicies_for_a_Share_Owning_Society_1997. An exposition of the problems
of the modern corporate environment, and a possible solution (although it
has not yet been adopted as UKSA policy) is given in the following article:
Shareholder_Select_Committees_2003.
Lastly the UKSA response to the European
Commissions consultation on Shareholders Rights in 2005 is given in:
EU_Shareholders_Rights and a
further response on the same subject in 2007 is given in:
Fostering_Shareholder_Rights. |
