Article

Shareholder Control and its Nemesis

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Abstract

While English company law traditionally supports the idea of shareholder control, some company law theorists have recently challenged it. In particular, it is accused of being unprofessional and discriminatory. Inexperienced and dispersed shareholders should not be allowed to take governance decisions at the exclusion of a number of non-shareholder interest groups. This article concerns three questions: what shareholder control means, how it works and why shareholders should control corporations. It will describe the very concept of shareholder control and examine three important theories; namely, the contractarian, the stakeholder and the shareholder control theories that are relevant to the debate over shareholder control in corporations. It will also examine the company law of England and Wales in order to see how the formal corporate governance scheme has reconciled these competing theories. Keywords: Corporate governance, shareholder control, stakeholder theory, contractarian theory.

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