United Kingdom Law of Business Organisation

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This paper seeks to support the former trend since one share one-vote system hinders good corporate governance. During general shareholder meetings, the shareholders make decisions essential matters on ownerships inclusive of the board of director’s approval, as well as merger approval. These decisions, in principle, are made through a majority of the votes as exercised by the shareholders. Thus, the decisions that are made at meetings of general shareholders are affected significantly, by allocation of voting rights among the shareholders. Company law in the United Kingdom stipulates that shareholders will be entitled to a single vote for every share that they hold at a meeting of shareholders. This can be doctrinally interpreted as a provision for the principle of one share one vote, which is the basic rule that governs voting rights allocation among shareholders. Essentially, the principle of one share one vote comprises of three major elements. One, all who are shareholders through acquisitions of company shares are entitled to exercise their voting rights in the general shareholders’ meeting of the company. The voting rights of a shareholder that he/she is entitled to are proportional to the shares that the shareholder has in the company. The third principle is a value judgment, which underlies the other two. The voting rights exercised by shareholders are proportional to the risks associated with the company as assumed by the shareholders. … Commentators like Dominic Barton have strongly advocated for the strengthening of voting rights in the long term or rescinding of voting rights from short-term investors. Significantly, the European Commission is preparing a proposal that seeks to give loyal shareholders more influence in voting. Various companies, like Manchester United, seeking protection from short-term pressures, have gone public with dual class shares, which seek to give their owners voting power over 150 times more powerful than for outside investors2. This is informed by the belief that these people are more concerned about the long-term success of the company. Companies that adopt similar structures during their IPOs have gone on to issue non-voting stock. The fact that respected policy makers, commentators, and companies are proposing for the apportioning of voting rights in an unequal manner among shareholders indicates its attractiveness3. Beginning in the early 90s as corporate governance started its rise to prominence. the principle of one share one vote has been seen as a gold standard. Even those countries that preferred dual class shares have sought to lessen the power distance that this structure creates. For example, Sweden amended company law to reduce disparity that was permitted in voting rights from 1000:1 to a current maximum of 10:14. In addition, research studies have discovered that letting shareholders accumulate power disproportionate to his/her economic stake could cause abuse, especially in those regions with weak minority shareholder protection. There are various suggestions on how to countenance shareholder discrimination. In order to be fair and not entrench control, voting rights