Shareholders under siege

DC — Tue, 05 Jul 2011 16:16:35 +0000

Stuart Theobald wrote a compelling article in the June/July issue of the Investors Monthly supplement to the Business Day Newspaper. This article focused on the apparently diminishing power of the shareholder in the increasingly aggressive corporate governance culture of our day. In short the article focused on the responsibility of boards to engage the interests of a much wider group of stakeholders which could put it at loggerheads with the wishes of the shareholders – even in the case of a 90% shareholder vote in favour of a particular course of action. This brings into focus what is currently happening with ever tightening legislation as well as increasingly demanding codes of corporate governance. While there are sufficient acts of delinquency in corporations world-wide to warrant such strong measures, it appears the basic formula of how companies come into existence and grow is being put at risk. After all the providers of capital are taking the most risk and yet it seems their needs are to be subservient to various other stakeholders. What is furthermore worrying is that despite the noble intentions of Codes of Governance, they are becoming so onerous to implement that it would come as no surprise that even those in authorship of codes may find meeting the principles an impossible task. It leaves one with the sense that legislation is becoming more aggressive because Codes of Governance are aspirational rather than real and practical. The article of Stuart Theobald is compelling reading.

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Shareholders under siege