ABSTRACT

This chapter discusses shareholder empowerment, which can be seen as a product of shareholder wealth maximisation (SWM), and assesses its effects. Before examining shareholder empowerment, it is essential to spend some time exploring shareholder power under US and UK law, as they are normally insulated from corporate management. The chapter also discusses shareholder rights in both jurisdictions respectively and analyses their main approaches to increasing shareholder power. Shareholder empowerment is indeed shifting decision-making power from the board of directors to shareholders. In order to fully discuss both the positive and negative aspects of shareholder empowerment, the chapter explores the benefits of authority which could be seen as the conventional rationale for limiting shareholders' power. Recent initiatives could be regarded as an attempt to encourage passive shareholders to exert a more active role and institutional investors to be more responsible. In fact, shareholders themselves may prefer weak shareholder rights in order to avoid shareholder activism.