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Research on Legal Issues of Institutional Shareholder Activism:Focusing on Promoting the Exercise of Sharehold Rights
Author: WuQiong
Tutor: WangYong
School: China University of Political Science
Course: Civil and Commercial Law
Keywords: Institutional shareholder Shareholder Activism Fiduciary Duty Shareholder Right Proxy Shareholder Proposal
CLC: D922.291.91
Type: Master's thesis
Year: 2011
Downloads: 93
Quote: 1
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Abstract
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On base of the Modern Corporate Theory, the separation of ownership and management can lead to agency cost, which is hard to control for the numerous disperse shareholders. This plight could be changed by the emergence and rapid increase of institutional investors. Comparing with the minority shareholders, the share proportions advantage and expertise resource of the institutional shareholders has been proven to effectively minimize the collective choice problem and agency costs. This is called the“Institutional Shareholder Activism”.The development of Institutional Shareholder Activism is the result of a continued joint action of the economic factors, the social factors as well as the legal factors, which is the major topic of this article.This Article discusses the institutional shareholders’involvement and improvement to corporate governance. It explores from the two backbones of the Institutional Shareholder Activism: First, the correlation between shareholder’s involvement and corporate performance, and secondly, fiduciary duties of institutional investors to enhance corporate governance. By observing the development track and status of the institutional shareholders in both the US and China, we also conclude that Institutional Shareholder Activism is both practicable and important for China.This article compares America Institutional Shareholder Activism with that of China in the aspects of two key legal mechanisms: First, the fiduciary duties of institutional investors, and second, the legal approach to enhance corporate governance, such as shareholder proposal, proxy solicitation and so on. It also analyses the relevant rules of China and explodes the difficulties which the pension fund and security investment trust fund face when they seek to make own voice.In the final part, this article provides some suggestions for the institutional shareholder activism in China.
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CLC: > Political, legal > Legal > Chinese law > Economic Law > Corporate law, company law
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