Shareholder activism has acquired a bad name being associated more with corporate raiding than it is with concepts of introducing corporate governance by the shareholders. This is a shame as shareholder activism is the best way to ensure effective corporate governance of a company. The current model gives shareholders the semblance of control at annual general meetings when they get to ask questions about the financials and vote in directors of the board. The reason that this is not real control is that any disparate body of people that does not communicate and internally discuss matters in advance of a group decision will invariably make a bad decision.
Tag Archives: Shareholder
Corporate Governance in the UAE Part 1: The Board of Directors
Corporate Governance is a much used phrase, one that is bandied about usually when things go wrong and forgotten once things improve. But what does it mean? The biggest mistake is when shareholders and board members believe that corporate governance is about oversight. Although this is a crucial role, it is not the primary role. In fact, too much control and oversight kills a business. The true primary role is building the business, which includes taking and managing risk, a view that is in opposition to regional thinking. At the opposite end of too much oversight is no oversight, which unfortunately tends to be the other approach taken by board members. Physical attendance can be rare and even then mental attendance is not always guaranteed.