Tag archives: shareholder democracy

Implications of the Collaborative Model of Corporate Governance

In a recent paper, Jill Fisch and Simone Sepe outline a new model for corporate governance: the Insider-Shareholder Collaborative model.

A Shift Towards Collaboration

Two models have previously dominated the corporate governance discourse: (i) the management-power model and (ii) the shareholder-power model. The former emphasizes a board’s decision-making authority as the corporation’s essential coordinating and monitoring system, the latter emphasizes enhanced shareholder power as the means to hold insiders accountable.

The authors argue these models are outdated since both assume insiders and shareholders are engaged in a struggle for power, when increasingly, the insider-shareholder relationship is collaborative rather than … Continue Reading

The Buyback Bonanza Makes a Return

Recently, there has been a trend among both Canadian and United States companies to buy back their shares in order to boost stock prices. In the past – most notably during the “Buyback Bonanza” of 2007 – this strategy has been employed by companies as a mechanism to decrease the amount of outstanding shares, thereby increasing the value of the stock.

For years some have criticized share buybacks, asserting that focusing on short term increases in stock prices and profits is detrimental to long term economic growth. They argue that as individuals invest more in the short term, there … Continue Reading

Federal government proposes changes to corporate law: What it means for corporate governance and shareholder activism

On September 28, 2016, Canada’s federal government introduced a bill proposing amendments (the Amendments) to the Canada Business Corporations Act (the CBCA), among other acts. The Amendments include new requirements for electing directors, mandatory diversity disclosure, and changes to shareholder communications. These proposed changes, if enacted, will have significant effects on corporate governance and shareholder activism in Canada. Here are some of the key things issuers and investors will need to know.

 Election of directors

 The Amendments introduce several changes to the election of directors. They will require publicly traded corporations, with some prescribed exceptions, to:

  • hold
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How corporate governance reforms spread

Recent research on the adoption of majority voting rules provides some insight on how corporate governance reforms are adopted and change company behaviour, and suggests that reforms may have the greatest impact on firms that are late to adopt them.

The push for majority voting, which requires that directors receive a majority (rather than a plurality) of the votes cast in order to be elected, has been highly successful, with over 90% of S&P 500 companies adopting some form of majority voting by January 2014. Majority voting is intended to make boards more accountable to shareholders.  A recent paper by … Continue Reading

The CCGG makes a push for enhanced proxy access

The Canadian Coalition for Good Governance (CCGG) recently released its much anticipated policy paper on “proxy access”, a term which refers to shareholders’ conceptual right  to nominate directors and have those nominees placed on management’s ballot. The CCGG takes the position that this right, which is supplemental to a shareholders right to elect directors, “is an essential component of shareholder democracy”. In a previous post, Kaitlind de Jong reported on the efforts the CCGG has undertaken to promote enhanced proxy access for shareholders in Canadian public companies prior to the release of its policy.

Current best practices in Canada … Continue Reading

Dual-Class Shares May Increase Value for Shareholders

A significant issue regarding the corporate governance of public companies arises from questions regarding the optimal role of shareholders in navigating a company’s direction.  The one share, one vote view of the world posits that shareholder democracy is best achieved when the division of control amongst shareholders holds true with the division of economic ownership.  In contrast, a number of major corporate players have governance and share ownership structures that allow certain classes of shareholders a disproportionate amount, relative to their economic ownership, of control with respect to strategic decision-making.  While these kinds of structures may initially appear contradictory to … Continue Reading

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