Protection of shareholders

In a financial restructuring, shareholders typically get wiped out, and bondholders become the new shareholders.

Ownership and shareholder rights

Draft article 11 Protection of shareholders

As a result, executives were not exposed to the potential negative consequences that large losses could bring about for preferred shareholders, bondholders, and the government as a guarantor of deposits.

Any information disclosed to one shareholder should also be equally available to all shareholders (FEE, 2003a).

Should Shareholders Be Kings?

Shareholders used to put up with relatively meager dividends compared to today.

One set of concerns arises from the perspective of shareholders.

In the interest of protecting minority shareholders, the principle of equality of disclosure should be practiced, such that all shareholders receive information equally.

Shareholders seem to take little interests in pay policy.

Their speculative frenzies ruined shareholders, customers, and the economy.

This information is of particular interest to minority shareholders.

It is recommended that this disclosure include the concentration of shareholdings, for example the holdings of the top 20 largest shareholders.

In the next step, we built the network around these companies, so we took all the TNCs' shareholders, and the shareholders' shareholders, etc., all the way upstream, and we did the same downstream, and ended up with a network containing 600,000 nodes and one million links.

Thirty years on, shareholders have broken definitively with this system.

The results of a general meeting should be communicated to all shareholders as soon as possible.

This allowed us to assign a degree of influence to each shareholder.

Equity owners in banks should not get a free ride.

Shareholders organized themselves into pension funds, investment funds, and hedge funds.

Japan recapitalized its banks in 1998, but did not wipe out equity holders.

That is the only way to impose real discipline on shareholders, bondholders, and corporate leaders.

Executives interests were tied to the value of their firms common shares or even to the value of options on such shares.

Executives collected generous bonuses, and equity holders were protected by limited liability.

But they should realize that large foreign shareholders in financial firms may be far less effective than locals in coaxing central banks to extend massive, no strings attached credit lines.

It was queried whether a separate article on the protection of shareholders was needed at all, since shareholders were already protected under the articles on the protection of natural or legal persons, as appropriate.

Bondholders were saved because governments generally chose to infuse cash in exchange for common or preferred shares which are subordinate to bondholders claims or to improve balance sheets by buying or guaranteeing the value of assets.

The ad hoc group recognized that the beneficiary ownership structure should be fully disclosed to all interested parties.

Thus, around 4  of Latvia's inhabitants are shareholders.

To the extent that an internationally wrongful act of a State causes direct injury to the rights of shareholders as such, as distinct from those of the corporation itself, the State of nationality of any such shareholders is entitled to exercise diplomatic protection in respect of its nationals.

But corporate spending on politics can also hurt the interests of shareholders.

Unlike common stock, bonds, and real estate, the value of gold does not reflect underlying earnings.

We cannot rely on shareholder democracy as our only system of corporate control.

In Greenspan s words, the self interest of lending institutions would protect shareholders and the economy from lending excess.

Claims against the personal wealth of shareholders would be blocked by the limited liability constraint.

It is good to have a business sector in which shareowners are not prey to self dealing CEOs.

The OECD Principles outline a general consensus as to the nature of shareholder meetings and the requirement to make shareholder participation as simple and effective as possible and ensure the equitable treatment of all shareholders.

The group discussed the fact that disclosure should be made of the process for holding and voting at annual general meetings and extraordinary general meetings, as well as all other information necessary for shareholders to participate effectively in such meetings.

But we face a global problem, with many international stakeholders, and this requires an urgent and worldwide response.

This practice is considered by some to dilute the influence of shareholders, and to be a distortion of the connection between investment risk and the decision making process.

In many but by no means all countries, the primary corporate objective is to maximize the long term return to shareholders (shareholder value).

Yet without shareholder pressure, all the signs are that the problem will persist.

World Bank officials, shareholder advisers, and financial economists have all made considerable efforts to develop such standards.

This reflects the view that all shareholders should have a right to be equally informed, and complements the issue of simultaneous disclosure of information discussed in section IV below.

Enterprises should do everything possible to facilitate the effective participation of all (including foreign) shareholders in general meetings.