Book Description

This book examines prevailing conceptions of the corporation in light of developments in corporate governance since the introduction of the United States Sarbanes-Oxley Act in 2002 and the global financial crisis (GFC) of 2008. In particular, its purpose is to explore the perplexing question of the extent to which corporations are beholden to the will of their shareholders. Thus, this book takes into account the practical realities that public corporations face, including increasingly complex legal regimes, shareholder activists and volatile capital markets. In recent years, shareholders have asserted more and more control over public corporations, no longer content to play the part of the passive owner. Perhaps in response to this pressure, legislators and regulators have grappled with the question of what protections shareholders should be afforded, particularly in the decade since the GFC. This shift in attitude by investors and regulators alike invites scholars to revisit the nature of the relationship between shareholder and corporation, and to ask what role the law should play in affirming shareholders' ability to influence corporate governance.This book introduces a new concept called "Shareholder-driven Corporate Governance," or SCG. This term refers to an approach to understanding the corporation that seeks to protect shareholders' interests while also affirming their involvement in governance. It refers to both actual and potential governance strategies. SCG is a normative term in the sense that it presents a goal to which lawmakers (not to mention investors) may aspire. It is also a descriptive term, explaining the ongoing phenomenon of a shifting balance of power that increasingly accommodates shareholder participation in corporate decision-making. In exploring both positive questions and normative, aspirational issues relating to SCG, this book examines the rise of shareholder activism across multiple jurisdictions including the United States, United Kingdom and Canada. In these jurisdictions, members of boards of directors have fiduciary duties, but the following questions arise: how should these duties be discharged in an age of shareholder activism? Does SCG change historical and current analyses of boards' fiduciary duties? Should SCG impact law reform efforts? These broad questions lead to a consideration of three themes, which illustrate the importance of SCG and which are at the heart of this re-examination.