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Company Law and the Myth of Shareholder Ownership

Company Law and the Myth of Shareholder Ownership Paddy Ireland* In recent years, the rather arcane subject of corporate governance, meaning the governance of the public companies that dominate the economy, has risen high on the political and legal agenda. Various reasons for this can be identified, prominent amongst them the debates, with which the governance issue has become entwined, about the virtues in relation to both social welfare and international competitiveness of different versions of capitalism and the corporation. As company lawyers are well aware, diverse opinions have emerged, with some advocating the adoption of a legal model of the company based around so-called stakeholding principles akin to those said to be found in Germany and Japan, while others seek to reinvigorate the traditional, shareholder-oriented, Anglo-American model. Despite these differences, however, there is widespread agreement that shareholders have an important role to play in ensuring good governance. For some, good governance requires a restoration of shareholder supervision and control. For others, including many supporters of ‘stakeholding’, it should not be judged purely in terms of maximising ‘shareholder value’ but still requires more ‘committed’ ownership by shareholders, if only to eradicate the danger of ‘short- termism’. In keeping with this, the Labour government has recently asserted the http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Modern Law Review Wiley

Company Law and the Myth of Shareholder Ownership

Ireland, Paddy
The Modern Law Review , Volume 62 (1) – Jan 1, 1999
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Publisher
Wiley
Copyright
Copyright © 1999 Wiley Subscription Services
ISSN
0026-7961
eISSN
1468-2230
DOI
10.1111/1468-2230.00190
Publisher site
See Article on Publisher Site

Abstract

Paddy Ireland* In recent years, the rather arcane subject of corporate governance, meaning the governance of the public companies that dominate the economy, has risen high on the political and legal agenda. Various reasons for this can be identified, prominent amongst them the debates, with which the governance issue has become entwined, about the virtues in relation to both social welfare and international competitiveness of different versions of capitalism and the corporation. As company lawyers are well aware, diverse opinions have emerged, with some advocating the adoption of a legal model of the company based around so-called stakeholding principles akin to those said to be found in Germany and Japan, while others seek to reinvigorate the traditional, shareholder-oriented, Anglo-American model. Despite these differences, however, there is widespread agreement that shareholders have an important role to play in ensuring good governance. For some, good governance requires a restoration of shareholder supervision and control. For others, including many supporters of ‘stakeholding’, it should not be judged purely in terms of maximising ‘shareholder value’ but still requires more ‘committed’ ownership by shareholders, if only to eradicate the danger of ‘short- termism’. In keeping with this, the Labour government has recently asserted the

Journal

The Modern Law Review – Wiley

Published: Jan 1, 1999

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