ABSTRACT
United States (US) corporate governance traditionally regards shareholders as ‘spectators’ or ‘bystanders’. Shareholder activism has therefore always been controversial, while the protection of shareholder value has been at the centre of US corporate governance. A shareholder needs to rebut this presumption to make the courts scrutinise corporate decisions. The plaintiff, a minority shareholder in the defendant company, sued the defendants because they refused to install lights at a baseball stadium which would enable the team to play at night and generate extra revenue. The shareholders argued that the board breached its fiduciary duty as a result of the failure to monitor and adequately control the business risks in the subprime mortgage market the company had taken and to disclose the risks associated with the subprime lending market. An additional concern also arises from the fact that both the shareholders and directors hold the authority to adopt by-laws.
