Chapter 9 Issue for Debate: Shareholder Rights vs. Corporate Manager Rights
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The current regulations issued by the Regulators in The United States are very appropriate, though few changes need to be made to these rules. These changes include;
Giving Opportunities for every stakeholder to share their proposal regardless of their share in the company. Unlike the previous guidelines, which only allowed the shareholders with one percent share or the US $2,000 and above to make their proposal, this rule will enable shareholders will even lesser shares to be heard (Gleason, pg. 28). The proposals will then be presented to all the shareholders for voting. The proposal that gets the highest number of votes irrespective of the number of votes is considered. This would help the minor shareholders to consider adding their shares. The minor shareholders should have a representative on the board of management as well.
There should be a limit on the amount to be spent on every proposal regardless of the shares of the shareholder who gives out the proposal. This will help prevent overspending on some proposals whose impact may not be as huge as thought by the board of directors. This will also help protect the shares of minor investors. The minors’ shareholders also have other ways to take part in the boards meets (Pornsit, pg.31). These are the use of constructive dialogue with the organizations’ administrators. Several studies have indicated that a positive relationship between the shareholders (including the minority) increases the companies’ productivity. The shareholders are able to exert positive and productive pressure on the corporate managers. This is because the minority shareholders’ proposals are also considered, so they feel to be part of the companies.
References
Jiraporn, Pornsit, and Kimberly C. Gleason. “Capital structure, shareholder rights, and corporate governance.” Journal of Financial Research 30.1 (2007): 21-33.
Ireland, Paddy. “Limited liability, shareholder rights and the problem of corporate irresponsibility.” Cambridge Journal of Economics 34.5 (2010): 837-856.
Hetherington, John AC. “When the Sleeper Wakes: Reflections on Coporate Governance and Shareholder Rights.” Hofstra L. Rev. 8 (1979): 183.