ABSTRACT
This chapter reviews the functions of private equity (PE) and venture capital (VC) in corporate governance and analyses the specific connection between the company law in common law jurisdictions and the development of the PE and VC industry. It argues that although the board of directors is regarded as the centre of the corporate governance in western countries, owing to their different cultural and social backgrounds, the limits of the board of directors should be reconsidered in Chinese company law. Shareholder activism can be described as ‘the way in which shareholders can assert their power as owners of the company to influence its behaviour’. Shareholder activism is commonly categorised in two forms: defensive shareholder activism and offensive shareholder activism. In response to the new challenges in the capital market of the UK, the Companies Act 2006 is making a series of progress in improving the internal protection for shareholders, especially minorities.
