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Shareholder Democracies?Corporate Governance in Britain and Ireland before 1850$
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Mark Freeman, Robin Pearson, and James Taylor

Print publication date: 2011

Print ISBN-13: 9780226261874

Published to Chicago Scholarship Online: February 2013

DOI: 10.7208/chicago/9780226261881.001.0001

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Constitutional Rights and Governance Practice

Constitutional Rights and Governance Practice

The Proprietorship

(p.108) Chapter Five Constitutional Rights and Governance Practice
Shareholder Democracies?

Mark Freeman

Robin Pearson

James Taylor

University of Chicago Press

This chapter places shareholders at the centre stage, examining the roles that shareholders could be called upon to perform, from the active promotion of companies to the election and appointment of directors and salaried officers, the setting of remuneration, the oversight of major strategic decisions, and the amendment of the company constitution itself. The chapter aims to advance the understanding of this aspect of corporate governance by tracing more systematically the shifting constitutional balance between shareholder obligations and benefits. It shows that the right of shareholders to intervene in company affairs was traditionally bound up with various obligations and restrictions placed on shareholders, ranging from the requirement to extend the business to limitations on their freedom to contract with other companies. At the same time as they were divested of their powers over strategy and management, however, they were also shorn of their economic obligations, turning instead to ways of protecting their financial stake in the company. Thus, in an important sense, they were complicit in the reconfiguration of power within the company. Though they did this in the name of protecting their investments, the irony is that this trade-off left their investments vulnerable to depredations by unchecked directors and managers. Thus, the rights of shareholders examined in this chapter illustrate the great range of constitutional arrangements in joint-stock companies.

Keywords:   constitutional rights, governance practice, shareholders, companies, business, financial stake, joint-stock companies

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