Shareholder Activism

A century ago, American business found itself amidst the "great merger movement." In Britain, France, and Germany, in contrast, firms tended to eschew consolidation for cooperation, forming looser combinations such as cartels. At the same time, a remarkable concentration of corporate control emerged in the U.S. but not in Europe.
This essay presents preliminary research on the distribution of power among shareholders and the choice of corporate strategies at the tum of the century. It raises new questions about the capacity of firms to consolidate. What enabled American firms to merge with such ease? Did their European counterparts turn to cartels when they would otherwise have preferred to merge, because they lacked a similar capacity to merge?
The evidence presented here concerns nineteenth-century shareholder voting rights in the four countries. Traditional constraints on the power of large investors initially made corporate governance relatively democratic in all four, but such constraints--e.g., graduated voting scales--disappeared earlier in the U.S. Future research will consider whether this made mergers more feasible there and less so in Europe.

This project examines recent and ongoing misconduct in the financial sector and implications for corporate governance and accountability. The misconduct ranges from abusive mortgage trades and misreporting on derivatives losses to manipulation of commodity markets. Major corporations, such as JPMorgan Chase and Morgan Stanley, have paid billions of dollars to regulators in penalties. The research project reviews the events from the perspectives of corporate governance, specifically whether shareholders are penalized for wrongdoing of corporate managers, and how far the regulatory practice of making settlements with the companies promotes accountability and corporate governance. The penalties diminish shareholder wealth and the question is whether shareholders end up as “helpless victims.” The research herein has combined theoretical and empirical methods. The theory part of research includes discussion of various regulatory methods and their efficacy, the justification for the settlements concluded by the corporations with governments, grounds for proposed personal liability against executives, and possible class action lawsuits in the future. The empirical element consists of review of investigative reports, disclosures by the companies, and settlement orders made by regulatory agencies. This helps form an opinion on the culpability of executives and the related issue about whether the costs of misconduct in the form of penalties are passed on to shareholders.

This article discusses so-called “loyalty shares” (i.e., shares granting certain rewards such as extra dividends or voting rights to shareholders that hold their shares for a specified period of time) as a means of addressing short-termism in financial markets. Loyalty shares have been hotly debated in international policy circles recently. We review the experience with loyalty shares in a number of EU Member States and discuss the state of play at the EU level. In conclusion, we see little harm in letting companies and Member States experiment with loyalty shares and thereby putting them – somewhat ironically – to the market test.

Les investisseurs institutionnels détiennent la majorité des actifs financiers dans les économies industrialisées, ce qui leur confère un rôle essentiel dans les sociétés cotées en bourse, pour les individus, pour l’environnement et pour le fonctionnement du système économique dans son ensemble. Longtemps considérés comme des pourvoyeurs de capitaux passifs, les investisseurs institutionnels s’engagent de plus en plus en leur qualité d’actionnaires.

L’étude propose une réflexion analytique de l’engagement actionnarial des investisseurs institutionnels. A cet effet, l’engagement actionnarial est étudié comme un mécanisme de gouvernance et de prise de décision d’une collectivité, ainsi que comme un moyen par lequel les investisseurs institutionnels assument leur responsabilité fiduciaire envers leurs bénéficiaires finaux.

This article draws on the moral philosophy of Immanuel Kant to explore whether a corporate ‘duty of beneficence’ to non-shareholders is consistent with the orthodox ‘shareholder theory’ of the firm. It examines the ethical framework of Milton Friedman’s argument and asks whether it necessarily rules out the well-being of non-shareholders as a corporate objective. The article examines Kant’s distinction between ‘duties of right’ and ‘duties of virtue’ (the latter including the duty of beneficence) and investigates their consistency with the shareholder theory. The article concludes that it is possible within the ethical framework of shareholder theory for managers to pursue directly the happiness of non-shareholders. Furthermore, shareholders have a duty to hold management to account for the moral consequences of the firm’s activities on non-shareholding stakeholders.

En pleine saison des Assemblées générales 2017, forte de travaux menés au Centre européen en droit et économie (www.cede-essec. edu) sur la gouvernance pérenne et l'évolution de la dynamique des AG de 2012 à aujourd'hui, aidés des statistiques du Grand Prix des AG désormais intégré dans l'Institut du capitalisme responsable et d'éléments qualitatifs de Proxinvest, je questionne les droits, mais aussi le DEVOIR d'engagement des actionnaires, pour que vive la démocratie actionnariale et j'examine la possibilité d'un déplacement du pouvoir de décision du Conseil d'administration vers l'Assemble générale, revendication portée à la fois par des actes institutionnels à échelle de l'Union européenne (directive sur les droits et l'implication des actionnaires adoptée en mars 2017 après des mois de débat) et à échelle nationale par des acteurs spécifiques: association d'actionnaires minoritaires, mais aussi d'acteurs comme l'Autorité des Marchés Financiers, agences de conseils en vote…. Un parallèle peut être fait entre les conditions requises pour que notre démocratie se modernise afin que le citoyen s'y intéresse et participe à la construction d'un système de gouvernance publique pérenne et les conditions requises pour que la démocratie actionnariale se développe afin que l'actionnaire s'intéresse et participe aux décisions de l'entreprise, sans cependant tomber dans les dérives du système US, dont certains activistes utilisent les armes comme au Far West. Chiffres à l'appui, nous examinons ici l'évolution – qui demeure relative-de la participation des actionnaires en AG, de leur engagement et des sujets spécifiques d'engagement.

This year, the Dutch courts ruled two times in the AkzoNobel case. Two times, the courts denied the requests of activist shareholders of AkzoNobel to convene an extraordinary general meeting (EGM) to dismiss AkzoNobel’s chairman of the super- visory board. The reason for the shareholders’ request was the decision of AkzoNobel’s board not to engage in negotiations with PPG Industries (PPG) concerning its takeover bid
on AkzoNobel. The main arguments of the courts were based on the idea that the decision on a takeover bid is part of the company’s strategy, which belongs to the domain of the board, and that the shareholders failed to show a reasonable interest for convening an EGM. Therefore, it seems that the courts in the AkzoNobel case imposed significant restrictions to shareholder rights relating to the general meeting, in favour of the autonomy of the board and the interests of other stakeholders.

These decisions raise the question: are the decisions in the AkzoNobel case consistent with earlier Dutch case law? And are these decisions compatible with the Shareholder Rights Directive? This article discusses both decisions in the AkzoNobel case. Afterwards, the broader Dutch legal framework is explained. In particular, other Dutch case law is discussed concerning the restriction of shareholder rights to add items to the agenda of the general meeting or to convene a general meeting, such as the Boskalis/Fugro case and the Cryo-Save case. Finally, the compatibility of the Dutch legal framework with the Shareholder Rights Directive is analysed.

Conflicts between shareholders and the company are an inherent feature of company law. They do not only arise in case of mismanagement by the directors. Conflicts of interest between individual shareholders and the company or fellow shareholders also serve as an important source of shareholder revolts. These conflicts give rise to questions which are at the heart of company law: what is the relation between a shareholder and the company? What duties does a director owe his shareholders? How should the interest of the company be defined? Do directors need to take into account other interests than the company’s interest? Are shareholders well suited to prevent mismanagement by directors? May shareholders act solely in their own interest, or do they need to take into account the interests of others?

This Dutch thesis (Erasmus University Rotterdam; cum laude; summary in English summary) addresses these questions from a historical perspective. The book starts with the predecessors of the English and the Dutch East India Company, incorporated in 1600 and 1602, respectively, and ends with the current corporate governance debate. This study not only provides answers under current company law, but it also aims at deepening our insight into the evolution of company law, particularly with respect to the balance of power within companies. The focus is on Dutch law, but the argument is embedded in a broad international context, taking into account influences from other legal traditions, including the UK, the US, Germany and France.

Two legal forms, originating from Roman law, play an important role in this book: societas (partnership) and universitas (corporation). Both have historically influenced the development of company law. But they are also used as a metaphor for conflicts of interest between individual shareholders and the collective interest. The Roman societas attached great importance to the interests of individual partners, whereas the universitas has emphasised the interest of the institution as a whole. The book consists of five parts. Part I summarises the historical development of societas and universitas. Parts II-V chronologically analyse the development of the law on listed companies from the perspective of the relationship between shareholders and the company. Part V deals with the heart of the contemporary corporate governance debate.

Recent trends in shareholder empowerment have spurred a heated debate whether empowered shareholders will ultimately cure corporate ills or adversely affect corporate fortunes. While some scholars claim that further strides in empowering shareholders will improve managerial accountability and firm performance, critics warn that shareholder empowerment will merely amplify corporate myopia and shift the problem of managerial self-serving to shareholders' self-serving. In this volume we address this paradox by bringing together both proponents and skeptics of the shareholder empowerment movement, and focusing on management scholars’ insights on the implications of shareholder empowerment for contemporary corporations and their practices.

Shareholder activism has become a dynamic institutional force, and its associated, rapidly increasing body of scholarly literature affects numerous disciplines within the organization sci- ence academy. In addition to equivocal results concerning the impact of shareholder activism on corporate outcomes, the separation of prior research into financial and social activism has left unanswered questions critical for both the scholarly discourse on shareholder activism and the normative debate on shareholder empowerment. The heterogeneity of factors in shareholder activism, such as the firm, activist, and environmental characteristics that promote or inhibit activism, along with the breadth of activism’s issues, methods, and processes, provide a plethora of theoretical and methodological opportunities and challenges for activism researchers. Our multidisciplinary review incorporates the financial and social activism streams and explores shareholder activism heterogeneity and controversy, seeking to provide an impetus for more cohesive conceptual and empirical work in the field.

Resumen
El concepto de interés social es la noción medular y fundamental del moderno derecho de sociedades porque es sobre la que se construye todo el marco institucional del contrato de sociedad y la configuración de los derechos y deberes de los socios y administradores. Por esta misma razón es también un concepto que ha sido largamente debatido y controvertido. En el presente trabajo se realiza una valoración crítica de los dos planteamientos teóricos doctrinales mayoritarios (contractualista e institucionalista) que han influido e informado a nuestra legislación societaria y a los tribunales desde los orígenes. Partiendo de la base de la problemática práctica e idiosincrasia concreta que presenta el mercado español (cuyo tejido empresarial son pymes y sociedades de carácter “cerrado”), este trabajo se propone contribuir a la reflexión de una teoría ecléctica y alternativa que armonice algunos planteamientos de las dos teorías dominantes sobre el interés social de modo que puedan satisfacerse mejor las necesidades y objetivos de las sociedades de capital.
Palabras clave: derecho de sociedades, interés social, junta de accionistas, órgano de administración. sociedades de capital cerradas
Abstract
The concept of corporate interest is the core and fundamental notion of modern corporate law because it is on which the entire institutional framework of the corporation and the configuration of the rights and duties of the shareholders and directors are built. For this same reason it is also a concept that has been long debated and controversial. In the present work a critical assessment is made of the two main doctrinal theoretical approaches (contractualist and institutionalist) that have influenced and informed our corporate regulation and courts since the beginning. Starting from the basis of practical problems and concrete idiosyncrasies presented by the Spanish market (where Small and Medium Enterprises which adopt the legal form of closely-held corporation are majority), this work aims to contribute to the reflection of an eclectic and alternative theory that harmonizes some approaches of the two dominant theories on corporate interest so that the needs and objectives of corporations can be better satisfied.
Keywords: Corporate Law, Corporate Interest, Shareholder´s Meeting, Board of Directors, Closely-held corporation

Under the standard agency theory applied to corporate governance, active monitoring of manager-agents by empowered shareholder-principals will reduce agency costs created by management shirking and expropriation of private benefits (through, for example, high compensation and perquisites). But while shareholder power may result in reduced managerial agency costs, an analysis of how that power is often exercised in public corporation governance reveals that it also can produce significant costs: influential shareholders may extract private benefits from the corporation, incur and impose lobbying expenses, and pressure corporations to adopt inapt corporate governance structures. Because of these costs, the simple principal-agent model on which shareholder empowerment is based begins to collapse. This article offers an alternative model - a common agency theory for public corporations. A common agency is created when multiple principals influence a single agent; in the case of a corporation, common agency describes a shareholder/management relationship in which multiple shareholders with competing preferences exert influence on corporate management. The common agency theory set out in this article provides several important contributions to the literature on corporate governance and shareholder empowerment. First, the theory provides a more complete explanation of the motivations for and outcomes of shareholder activism, including the activities of governmental owners, large institutional investors and “social” investors. Second, the theory helps to more clearly delineate the costs and benefits of increasing shareholder power. Finally, building on these findings, the theory suggests possible regulatory changes to ensure that the benefits of shareholder activism outweigh its costs.

The widespread practice of earnings management adversely impacts the quality of financial reports and increases information asymmetries between owners and managers. The present study investigates the effect of shareholder activism (as expressed by the proxy proposals sponsored by shareholders), and monitoring by the largest institutional owner on earnings management. Our longitudinal analyses indicate that the number of shareholder proposals received by firms is positively related to subsequent earnings management, yet concurrently, monitoring by the largest institutional owners is negatively related to earnings management. Our findings shed light on the equivocal results reported by prior research regarding the impact of shareholder activism on firm performance, on one hand, and ownership monitoring and performance, on the other.

Increased Mergers and Acquisition (M&A) activity is considered the barometer of growth of an economy. India has recorded 162 M&A transactions worth $17.5 billion in the first six months of 2016, according to Mergermarket H1 India Deal Report – 2016. Though M&As have become business as usual in India, what has been rare is for proxy advisory firms to take active interest and comment on voting patterns in an M&A transaction. If that wasn’t rare enough, one case of M&A in fact found proxy advisory firms taking a stand on opposite ends of the issue of shareholder value maximization due to the terms of the deal in question. In this context, Vedanta – Cairn merger is a watershed case in deal-making in India in general and for shareholder activism in particular.

Metals and mining conglomerate Vedanta announced its decision to merge its subsidiary Cairn, India as a legitimate business decision in the fall out of plummeting commodity prices and depreciating rupee value. Though Vedanta is within its legal rights to restructure its businesses, there should be an economic rationale behind it leading to unlocking of enterprise value in the long-run. The proxy advisory firms opened up a public debate over the terms of the deal, some calling the proposed transaction “fair” while others castigating the parent firm for attempting to  usurp a cash rich subsidiary. This case study seeks to provide the background and necessary details of the Vedanta-Cairn deal in order to analyze its dynamics and uncover key lessons in Shareholder Activism, a rising phenomenon that will enrich the deal-making environment in India.

Resumen En este trabajo hacemos una revisión crítica de todas las medidas excepcionales que se han dictado en España en materia de Derecho de sociedades fruto del COVID-19. Las mismas responden a dos vectores: (i) el riesgo sanitario de reunirse físicamente personas; y (ii) fortalecer, los recursos propios de las sociedades mercantiles. A la primera finalidad responde un incentivo relevante para que se realicen reuniones del órgano de administración y de la Junta General por medios telemáticos, incluso cuando sus normas estatutarias no incluyeran esta posibilidad. También relacionado con esto, se han suspendido o recalculado los plazos para la formulación, supervisión y aprobación de la documentación contable. Al fortalecimiento de los recursos propios responden por su parte, las normas sobre la disolución de las sociedades, la propuesta de asignación del resultado y la suspensión del derecho de separación del socio. Se hace un análisis crítico sobre la base en que estamos ante normas de derecho especial que, como tales, son de interpretación restrictiva y de aplicación temporal, sin que sea posible su aplicación distinta a la expresamente prevista en la norma mediante su extensión analógica. Esta excepcionalidad es sin embargo compatible con la sistematización de la norma, esto es: su integración en el sistema jurídico. Por fin, algunas de estas soluciones legislativas, de la mano de la permanencia del COVID-19 y también de la experiencia, pueden dar lugar a cambios de más calado, a través de la conversión de algunas de estas disposiciones excepcionales en ordinarias. Palabras clave COVID-19, Junta General, Consejo de Administración, derecho de separación, disolución, cuentas anuales, propuesta de alteración del resultado, derecho especial, analogía, sistema. Abstract In this article I carry out a critical analysis of the COVID-19 emergency measures adopted in Spain as regards company law. The measures constitute a response to two vectors: (i) health risk associated with physical contact between people; and (ii) strengthening of the own resources of companies. The former is a relevant incentive to hold company board meetings, as well as General Meetings, through virtual means, even in cases where articles of association have not provided for such a possibility. Also in relation to the health risks mentioned, the limitation periods for drafting, oversight and approving of the accounting documentation. The provisions on liquidation, the proposals for allocating the surplus, and the suspension of the shareholders exit rights correspond to the strengthening of the companies' own resources. The critical analysis is carried out taking into consideration the extraordinary character of the provisions and their temporary application. They are therefore to be interpreted in a restrictive manner, and the use of the rules in an analogous way is not possible. This extraordinary character is nevertheless compatible with systemisation of the rules, i.e. their integration into the legal system. Finally, some of those legislative solutions, due to the persistence of the COVID-19 situation, as well as experience, may lead to more far-reaching changes, through the conversion of some of those extraordinary measures into the ordinary ones.

In the 1980s and 1990s, rapid market oriented reforms, liberalization and privatization (“shock therapy”) in developing and transformational countries caused economic and social problems that began to undermine the legitimacy of political democratization and market reforms itself. Scholars in the field of transformation and development theory found that market coordination alone was not able to fill the void left by a weak or weakening state. In this essay, we look at the case of Korea to find out if an active civil society can substitute functions of the withdrawing developmental state since the 1980s. We show that civil society organizations (CSOs) in Korea have been relatively effective in influencing political processes, shaping public opinion, compensating the weakness of political institutions, and contributing to general development. Korean CSOs achieved this remarkable impact despite substantial organizational problems and a relatively unfavorable socioeconomic and political environment. This effectiveness and the synergy between state and civil society make Korean CSOs very interesting to study for development scholars. Korea might offer some valuable lessons on how to improve advocacy CSOs in an unfavorable environment similar to that of many developing countries.

Controlling the composition of the board is important in corporate governance. In order to prevent incumbent members to capture the nomination process, an external nomination committee has been introduced in some Nordic countries. In Finland both internal and external nomination committees are used by listed companies. This feature provides an ideal case to test whether differences in nominating board members make a difference for board composition. Companies with a nomination committee composed of a group of external experts have, on average, more female directors on their boards, but less international diversity and less diversity in terms of age dispersion and director tenure. However, these differences become non-significant when the voting rights of the largest shareholders are included in the regression analysis. The results suggest that when ownership structure is taken into account the procedure used to select director candidates has a limited impact on the final board composition or diversity.

An ownership structure dominated by blockholdings is central for ‘Rhenish’ capitalism, because it provides ‘patient capital.’ Analysis of the 160 largest listed German corporations shows that blockholdings have declined and foreign investors have increased. This could enable activist hedge funds – ‘impatient capital’ demanding high returns – to have greater impact on German listed companies. In order to explore this phenomenon, three case studies have been conducted. These case studies indicate that blockholders are potentially able to shield companies against hedge funds, and that impatient capital is able to gain influence over corporations that are not protected by patient blockholders – however, the behavior of blockholders and hedge funds is more complex than commonly theorized. On balance, these developments contribute to an increased internal diversity of Rhenish capitalism.

Under an Arrowian framework, centralized authority and management provides for optimal decision making in large organizations. However, Kenneth Arrow also recognized that other elements within the organization, beyond the central authority, occasionally may have superior information or decision-making skills. In such cases, such elements may act as a corrective mechanism within the organization. In the context of public companies, this article finds that such a corrective mechanism comes in the form of hedge fund activism, or, more accurately, offensive shareholder activism.

Offensive shareholder activism operates in the market for corporate influence, not control. Consistent with a theoretical framework that protects the value of centralized authority and a legal framework that rests fiduciary responsibility with the board, authority is not shifted to influential, yet unaccountable, shareholders. Governance entrepreneurs in the market for corporate influence must first identify those instances in which authority-sharing may result in value-enhancing policy decisions, and then persuade the board and/or other shareholders of the wisdom of their policies, before they will be permitted to share the authority necessary to implement the policy. Thus, boards often reward offensive shareholder activists that prove to have superior information and/or strategies by at least temporarily sharing authority with the activists by either providing them seats in the board or simply allowing them to directly influence corporate policy. This article thus reframes the ongoing debate on shareholder activism by showing how offensive shareholder activism can co-exist with — and indeed, is supported by — Kenneth Arrow’s theory of management centralization, which undergirds the traditional authority model of corporate governance.

This article also provides a much-needed bridge between the traditional authority model of corporate law and governance as utilized by Professors Steven Bainbridge and Michael Dooley and those who have done empirical studies on hedge fund activism, including Lucian Bebchuk. The bridge helps to identify when shareholder activism may be a positive influence on corporate governance.

Although most diffusion research focuses on firms adopting new practices to maintain their legitimacy, this paper examines a setting in which firms adopted a controversial practice to defend themselves against challenges relating to corporate deviance. We argue that understanding defensive adoption requires attending to both the dynamics of organizational stigma and impression management, and test our theoretical claims by analysing the diffusion of an accounting practice, stock option expensing (SOPEX), following the Enron scandal. We first provide evidence that the media and shareholder activists transformed the practice into a defensive device by theorizing it as a solution to problems relating to corporate fraud and corporate governance. Using event history analysis, we then show that corporations that became targets of stigma-inducing threats were more likely to adopt SOPEX and that the media were a key force channelling these threats.

Corporate governance research emphasizes the influence of institutional owners on company outcomes such as strategic decisions, organizational structures, and executive compensation. However, little is known about the process companies use to gain support for management-sponsored compensation plan resolutions. This article reviews prior literature linking institutional ownership and compensation practices and investigates the little-studied process of how management tries to work with owners to secure shareholder approval of compensation plans. In addition, it provides brief cases of two Fortune 300 companies (General Mills and PepsiCo) that received positive votes on their compensation plans. The article ends with several recommendations for managers trying to gain institutional owners’ approval of future compensation plans.

Non-regression of the situation of shareholders and members of a bank or its creditors resulting from its forced restructuring

This document concerns the issue of non-regression of the situation of shareholders and members of a bank or its creditors resulting from its forced restructuring. The legislator has granted the shareholders and creditors the right to satisfy their receivables in the case of a forced restructuring of the bank at the level no lower than they would incur in normal insolvency proceedings.
The main purpose of this elaboration is to present basic regularities connected with shareholders’ and creditors’ rights to receive appropriate compensation within the frame of the forced restructuring of the bank. Particular emphasis has been placed on the judicial descriptions of the procedure for pursuing claims due to a violation of the right to appropriate compensation, due to the forced restructuring, at the level not lower than in the case of bankruptcy proceedings.

Shareholder activism has been largely overlooked in Hong Kong (HK). The HK disclosure regime provides far less information on activist investments to the public than and compared to Schedule 13D of the Securities Exchange Act 1934 in the U.S. A large number of activism in the form on private engagements have escaped public attention. This Article provides the first empirical evidence of shareholder activism as a credible market phenomenon in HK. I study both foreign and local activist investments in public firms during 2003-15. In the HK market that is dominated by family and state controlled firms, whereas minority shareholders are not expected to have much influence, my findings suggest that activist interventions enhance firm value both in the short- and long-run. In particular, firm value increases by 8% around activist disclosure of interests, and increases by 14% one year following these disclosures. At least 35% of the investee firms were open to activist suggestions or simply felt compelled to make adjustments or changes in the year subsequent to and following an activist investment. Further, those investee firms who underwent changes subsequent to an activist intervention witnessed their firm value grow by 26% in one year. These novel findings contribute to the policy debate on the benefits of shareholder activism. This Article points to the need for an improved disclosure regime that would provide more adequate information to the public about securities trades and their motives.

In this essay, we argue that state-civil society synergy is a powerful driving force for economic change. Only the combination of public policies and civil society engagement ensure an efficient implementation of reforms. We illustrate this argument with the case of the politically motivated minority shareholder movement that was a crucial factor in the reform of large business conglomerates in Korea since the 1997/98 Asian Financial Crisis. However, we also found that the results of civil society activity in the minority shareholder movement were mixed. The movement was successful where interest overlapped with profit-oriented shareholders, but failed in cases wherein broader political goals and comprehensive structural reforms were envisioned. The originally political minority shareholder movement became depoliticized and was successively co-opted by the dynamics of shareholder capitalism.

The shareholder wealth maximization norm exerts tremendous influence on both business practice and corporate legal scholarship. Widespread acceptance of the norm has produced substantial focus among corporate executives, analysts, and scholars on one key metric: share price. The norm and the related focus on equity prices rest on two key assumptions: (1) that the pursuit of shareholder wealth maximization, as measured by share price, effectively maximizes the wealth of actual shareholders and, (2) that the pursuit of shareholder wealth maximization, as measured by share price, is socially beneficial.

If the shareholder wealth maximization norm does not truly maximize shareholder wealth, it fails by its own terms. If pursuing shareholder wealth maximization does not produce a net social benefit but instead generates a net social harm, the pursuit of shareholder wealth maximization no longer constitutes a “win-win” for businesses and consumers but instead elevates business interests in a zero-sum competition between the two groups.

This Article addresses one context where the pursuit of share price gains both fails to maximize the wealth of all shareholders and fails to benefit society: corporate mergers and acquisitions activity. Since Henry Manne’s seminal paper, Mergers and the Market for Corporate Control, it has been generally accepted that merger gains accrue either through efficiency or market power. Efficiency gains involve creating synergies and eliminating redundancies, thus enabling merged entities to do more with less. To the extent that merger gains accrue via this route, mergers benefit everyone involved: shareholders benefit from a boost in share prices, society benefits from a more efficient marketplace, and consumers benefit from lower prices for goods and services. In contrast, market power gains enable the merged entity to increase the price of the goods it sells or the services it provides, thereby reducing consumer welfare. Because of the increased cost to consumers, this second option pits the interests of some groups against others. Wealthy shareholders likely benefit more from share price increases than they are harmed by the increased cost of goods and services, since these shareholders tend to own substantial amounts of stock and to make substantial sums from that stock. However, the reverse may be true for less wealthy shareholders and society at large. Corporate legal scholarship has largely failed to address this hidden cost.

Historically, economic literature has left unsettled whether merger gains accrue primarily through the former or latter routes, leaving scholars free to assume that merger gains do not necessarily come at the expense of consumers or society. Recent research, however, reveals that most gains in U.S. mergers come from market power increases. This finding exposes two key shortcomings of traditionalist interpretations of the shareholder wealth maximization norm: (1) share price gains serve as an inadequate proxy for increased financial welfare for all shareholders, and (2) share price gains serve as an inadequate proxy for increased social welfare.

If we truly desire to maximize the wealth of all shareholders and to benefit society as a whole, then we cannot rely on share price gains as a proxy for the interests of all constituencies.

In vista della trasposizione della Direttiva (UE) 828/2017 (“SHRD II”), il MEF ha avviato una consultazione sulla bozza di decreto, con proposte di modifica del Tuf e del codice civile in materia di operazioni con parti correlate, identificazione degli azionisti, remunerazione degli amministratori, proxy advisors e diritto dei soci di porre domande prima dell’assemblea. Le proposte comprendono alcuni casi scelte rilevanti, in quanto rappresentato l’esercizio delle opzioni lasciate dalla direttiva al legislatore nazionale e, in alcuni casi, mantengono alcune previsioni della disciplina attuale italiana non previste dalla direttiva.
Considerata la rilevanza di questi temi e l’assenza di un adeguato dibattito pubblico sugli effetti sistemici delle scelte che potranno essere fatte al riguardo, Assonime ha deciso di organizzare un seminario a “porte chiuse” nel quale coinvolgere accademici, esperti e rappresentanti del mercato, per avviare una riflessione e confrontare possibili soluzioni, anche alla luce delle posizioni espresse da Assonime e Confindustria nella risposta alla consultazione.

Commodity trading firms occupy a central position in global supply chains and their activities have been associated with financial instability, social upheaval and manifold forms of ecological devastation. This paper examines these companies in the context of debates regarding corporate financialization. We find that since the 2003-2011 commodity boom, trading firms have become less financialized in terms of the source of their profits as they have shifted away from financial activities. However, they have become more financialized in terms of the destination of profits, with dividend and share repurchase commitments reaching new heights after 2015. In view of this finding, we inquire into whether trading firms’ growing commitment to shareholder payouts will
encourage them to continue to prioritize short-term returns, or whether instead these
firms’ linkages to financial markets will lend clout to financial activists concerned by the
long-term environmental and social consequences of their operations. Ultimately, we
find several sources of commodity trader resilience which insulate them from
shareholder resolutions and divestment campaigns aimed at curbing ecological
destruction and human rights abuses in their supply chains. We accordingly suggest that
pressures from activist investors must be complemented with more wide-ranging efforts
to defend living systems across the planet.

Organizarea şi funcţionarea unei societăţi este limitată de legislaţie, ordinea publică şi bunele moravuri. Înţelegerile (pactele) între asociaţi sunt fundamentale nu doar pentru existenţa societăţii dar şi pentru cooperarea şi găsirea punctului de interes comun între asociaţi. Cele mai multe pacte între asociaţi nu au caracter public, iar forma care ar institui un titlu executoriu ar putea fi un act autentic. Aceste tensiuni - public/ascuns, executare voluntară/ executare silită - sunt premise ale unei atente negocieri ale pactelor pentru ca acestea să devină parte din viaţa societăţii. Lucrarea are un pronunţat caracter descriptiv, de informare cu privire la nuanţele dobândite de experienţe ale instanţelor străine, de soluţiile doctrinare de drept comparat, elemente care sunt avute în vedere pentru o eventuala aplicare în cadrul sistemului juridic românesc.

"The aim of this article is to research whether, during exercising governing rights, especially - a right to vote on General Meeting of Shareholders, shareholders are obliged to act (to vote) in the best interest of the company as a whole, or they are allowed to act in their personal interest.
To answer the aforesaid question, it must be detected whether duty of shareholders’ loyalty is prescribed under the Croatian Law and consequently, if the answer is positive, which obligations may be derived from a respective duty.
The (alleged) shareholders’ duty of loyalty is compared with similar duties provided by Anglo-Saxon Law Systems – such as: duty of care, due diligence, good faith etc., from which (according to legal theoreticians and some practitioners) a shareholders’ duty of loyalty may be inferred.
Finally, (possible) legal consequences provoked by breach of shareholders’ loyalty duty, such as: a duty to compensate incurred damages and a right to impugn a decision taken on General Meeting of Shareholders, are going to be examined."

"Cilj ovog rada je ispitati i ustanoviti jesu li dioničari pri ostvarivanju upravljačkih prava, a prije svega pri ostvarivanju prava glasa, dužni djelovati u skladu s interesima društva ili mogu djelovati i u skladu s vlastitim interesima. Da bi dobili odgovor na navedeno pitanje, najprije ćemo pokušati utvrditi postoji li u pravu društava RH dužnost dioničara na lojalno postupanje prema društvu i ostalim dioničarima, koji je sadržaj navedene dužnosti te iz kojeg pravnog temelja ona proizlazi. Ukratko će se prikazati isti ili slični instituti iz kojih, u zemljama kontinentalnog i anglosaksonskog pravnog sustava, proizlazi obveza dioničara na postupanje u skladu s interesima društva. Ukazat će se i na moguće pravne posljedice radi povrede dužnosti lojalnog postupanja, kao što su: dužnost naknadne štete, mogućnost pobijanja odluka glavne skupštine i sl."

"Das Ziel dieser Arbeit ist es, zu prüfen und festzustellen, ob Aktionäre bei der Verwirklichung von Verwaltungsrechten, vor allem von Stimmrechten, verpflichtet sind, gemäß den Gesellschaftsinteressen zu handeln, oder ist es ihnen erlaubt,
gemäß den eigenen Interessen zu handeln. Um die genannte Frage zu beantworten, werden wir zuerst versuchen, festzustellen, ob es im Gesellschaftsrecht der Republik Kroatien die Pflicht der Aktionäre zu loyalem Handeln gegenüber der Gesellschaft und anderen Aktionären besteht, was beinhaltet diese Pflicht und
aus welcher Rechtsgrundlage geht sie hervor. Gleiche oder ähnliche Institute, aus welchen in Ländern des kontinentaleuropäischen und des angelsächsischen
Rechtssystems die Pflicht der Aktionäre, gemäß den Gesellschaftsinteressen zu handeln, hervorgeht, werden kurz dargestellt. Es wird auf die möglichen Rechtsfolgen wegen Verletzung der Pflicht zu loyalem Handeln hingewiesen, wie z.B. auf die Pflicht der Schadenerstattung, die Möglichkeit der Anfechtung von Hauptversammlungsbeschlüssen u.Ä."

"Lo scopo del presente contributo è di indagare e di accertare se gli azionisti nella realizzazione dei poteri amministrativi, e prima di tutto nell’esercizio del diritto al voto, siano tenuti ad agire nel rispetto degli interessi della società oppure possano operare nel rispetto di interessi propri. Al fine di rispondere a tale interrogativo, per prima cosa cercheremo di accertare se esista nel diritto societario croato il dovere di lealtà degli azionisti nei confronti della società e dei rimanenti azionisti, quale sia l’eventuale contenuto di tale dovere e su quali basi giuridiche si fondi. Brevemente si passeranno in rassegna gli istituti analoghi o simili dai quali deriva l’obbligo dell’azionista di agire conformemente agli interessi della società negli altri sistemi giuridici del diritto continentale ed anglosassone. Saranno, altresì, indicate le possibili conseguenze giuridiche della violazione del dovere di lealtà, come ad esempio: dovere di risarcimento del danno, possibilità di annullamento delle delibere dell’assemblea generale ed altre."

"Posljednjom novelom Zakona o trgovačkim društvima, odnosno donošenjem Zakona o izmjenama i dopunama Zakona o trgovačkim društvima iz 2009. godine , koji je stupio na snagu i počeo se primjenjivati 1. svibnja 2010. godine, u naše zakonodavstvo provedene su odredbe Direktive Europskog
parlamenta i Vijeća 2007/36/EC o ostvarenju određenih prava dioničara u dioničkim društvima dionice kojih su uvrštene na uređeno tržište radi trgovanja od 11. srpnja 2007. Iako polje primjene Direktive obvezuje države članice na provedbi odredbi samo glede uvrštenih dioničkih društava, u našem pravu je ta
direktiva provedena na način da se primjenjuje i na društva čije dionice nisu uvrštene na uređeno tržište, dok su za uvrštena društva mjestimično zadržana posebna rješenja.
U radu se analiziraju nova rješenja ZTD-a o navedenim pravima dioničara u pripremi skupšine i na samoj skupštini te se ista dovode u vezu s rješenjima Direktive."

There has been a progressive shift in shareholder activism in South Africa as shareholder demands for greater levels of accountability, reasonable executive remuneration and disclosure and transparency are increasing. Frustration with increasing high-profile corporate scandals and governance failures has also caused shareholder activism to gain momentum in South Africa. This article discusses the South African legal framework relating to shareholder activism and identifies trends in shareholder activism in South Africa. While the growing increase in shareholder activism is welcomed, this article contends that South Africa still has a long way to go compared to the level of shareholder activism in the USA, the UK and Australia. Recommendations are made to enhance shareholder activism in South Africa.

The goal of the dialogue with AuraMinerals is for the company to adopt a transparent, accountable,
and verifiable gold-standard human rights policy. My work with the JCIR acknowledges the
shortcomings of CSR and, through shareholder activism, pursues deliberation with Aura Minerals
and the broad range of stakeholder groups that comprise my dialogue team. Our team has access
to local information and a context-specific understanding of Aura’s business challenges. Dialogue
with such individuals is the most effective mechanism for helping corporations to make ethical
decisions in complex, fast-paced business environments. This approach is narrowly tailored to
have three favorable results in incentivizing corporations to become good corporate citizens: (1)
It creates a larger pool of context-specific information; (2) it ensures the representation of a broad
range of stakeholder views; and (3) it holds corporate managers accountable to the public.