Can a global legal misfit be fixed? Shareholder stewardship in a controlling shareholder and ESG world

Publication Type

Book Chapter

Publication Date

4-2022

Abstract

UK-style shareholder stewardship is a global legal misfit because it was designed for a jurisdiction with dispersed shareholding where institutional investors collectively control a majority of the shares but has been transplanted into jurisdictions where controlling shareholders predominate. What ought to be the role of shareholder stewardship in a world dominated by controlling shareholders? This chapter analyzes the effectiveness of shareholder stewardship in advancing ESG in controlled jurisdictions then evaluates the effectiveness of the only stewardship code – the Singapore Family Code – to have attempted to reorient UK-style stewardship to a controlling shareholder environment. It concludes that prospects for shareholder stewardship in jurisdictions where controlling shareholders predominate are likely limited. Although a reoriented approach may help nudge controlling shareholders towards ESG, hard law will likely be needed to bring about real change. This suggests that shareholder stewardship may be used as a smokescreen by controlling shareholders and governments, sending a formal signal that they are addressing ESG when functional change is limited in practice.

Keywords

shareholder stewardship, controlling shareholders, comparative corporate law and governance, ESG

Discipline

Banking and Finance Law

Research Areas

Corporate, Finance and Securities Law

Publication

Global Shareholder Stewardship

Editor

Katelouzou, Dionysia; Puchniak, Dan W.

First Page

599

Last Page

612

Publisher

Cambridge University Press

Additional URL

https://doi.org/10.1017/9781108914819.029

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