ABSTRACT
The aim of this chapter is to explore the assumptions behind the attitude that the shareholders of public companies should behave like the owners of a business who have entrusted its management to agents and that their failure to do so is a major defect in the existing system of corporate governance. The idea that shareholding is essentially concerned with the provision of equity capital for businesses will be used as a basis for examining the legal position of shareholders. From this perspective, shareholding can be treated as a contractual relationship in which the original holders of shares in a company receive a perpetual claim on the company’s profits in return for supplying equity capital and the overriding aim of shareholders is assumed to be the maximisation of their return from this claim.
