During the last decade, discussion on shareholder activism concentrated on hedge funds, some seeing them as agents for passive institutional shareholders, bridging the separation of ownership and control, others believing their short-term value-maximization interests differing fundamentally from those of other shareholders. Some have seen hopes for long-term activism in institutional shareholders such as pension funds. In the European Union, activism is seen positively, encouraging proposals to enhance shareholders’ rights against the boards’ discretion. The purpose of this chapter is to focus on institutional investor activism and its impact on both their ultimate beneficiaries and their target companies, and how investors could be incentivised to more sustainable behaviour in their activism. Albeit the focus is on the European Union, institutional investors are global. A broader perspective including North America and Asia is therefore taken. The most important impact of institutional activism is arguably normative, causing changes in corporate governance. Specific attention is therefore given to governance questions.

Instead of relying on private ordering, the corporate governance in Taiwan has been developed mostly through government regulations. Starting with the brief introduction of Taiwan’s Company Act (CA) and corporate governance in practice, this chapter explores the legal means available for shareholder engagement under the CA: the right to call a shareholder meeting, proposal right, voting and information right, focusing on shareholders’ participation and voting in the shareholder meeting. Also, this chapter illustrates the current landscape of shareholder activism in Taiwan, observing that most activists pay more attention to the interaction with the management in the shareholder meeting, than to behind-the-scene engagements to achieve their goals, despite anecdotal evidence of the aforementioned engagements. Nonetheless, with the securities authority’s promotion of shareholder activism, this chapter notes the increase of shareholder activism events, demonstrating harbingers for the change of Taiwanese corporate governance in practice.

Institutional investors have traditionally dominated the ownership structure of large publicly traded companies in the United Kingdom. Attention to the role and participation of institutional investors in the corporate governance of British firms has been growing since the late 2000s following regulatory efforts to empower shareholders, for example, through say-on-pay votes, and to promulgate best practices of shareholder voting and engagement via soft law stewardship codes. This chapter presents the state of the art and recent trends in shareholder engagement and voting by institutional investors in the UK. Asset managers affiliated with large fund groups have been taking a more active approach to stewardship, although their efforts generally focus on identifying and promoting best practice corporate governance standards and dealing with global threats such as climate change and social matters. The chapter also discusses the roles of activist shareholders, proxy advisers and the COVID-19 pandemic in shareholder voting and engagement.

Empowerment of minority shareholders has been a central theme of China’s corporate governance movements in the past two decades. Cumulative voting and the majority of the minority rule are exemplary of Chinese reformers’ efforts to strengthen shareholders’ rights to vote. Other shareholders’ rights, such as the right to call a meeting, the right to propose, and the right to information, are also in place and, at least in theory, enable public shareholders to engage the controlling shareholders of their investee companies. The practical effect of these legal rights needs to be evaluated in the context of China’s path-dependent conditions, notably the prevalence of concentrated share ownership, the relatively weaker presence of institutional investors, and the approach to allocating corporate power which centres on the shareholders meeting.

As in many other countries, shareholders in French companies have only those powers that are conferred upon them or upon the general meeting. Nevertheless, the general meeting is vested with important rights: it is in charge of the election of the board of directors, has a say-on-pay and a say on related party agreements as well as a number of ‘fundamental decisions’ of the corporation. Shareholders make active use of their (voting) rights. In practice, shareholder participation remains relatively stable over time, with higher participating rates of shareholders with double voting rights and an increasing number of shares voted by mail. Most voting items are approved with a large majority of the votes, although those on remuneration, related party agreements and share issuances are sometimes heavily contested. Engaged shareholders make regularly use of shareholder proposals and shareholder questions. Further, every year, a number of French companies are confronted with activist shareholders who want to effect changes in the strategy or governance of the company, albeit with varying degrees of success. To meet their requests, an increasing numbers of companies are appointing a director with special responsibilities vis-à-vis shareholders.

The Chapter conceptualizes an analytical framework that can be adopted as a basis for future comparative research on shareholder voting and engagement. The conceptual framework consists of three layers: voting laws, engagement tools, and the eco-system for voting and engagement. The Chapter proceeds to discuss the future role of the shareholders meeting. It suggests that the global reality of the shareholders meeting cannot be readily and categorically reduced to either one of the dichotomic stereotypes: the shareholders meeting as a pro forma or as an emanation of shareholder democracy. Rather, there should therefore be a dynamic approach to the shareholders meeting. The Chapter also discusses the Handbook’s implications for the discourse on shareholder voice and activism, highlighting both the promises and limitations of shareholder activism around the globe. The Chapter concludes with discussions of some avenues for future research in the fast growing field of comparative shareholder voting and engagement.

All SAs (whether listed or not) have basically the same structure comprising a General Meeting, a Board of Directors (BoD), and auditors, whereas the GM is the supreme organ of a SA, tasked (explicitly or implicitly) with deciding on any matter related to the Company. The GM is called mainly by the BoD, minority shareholders or specific other authorized persons. The ownership structure of Greek listed companies is highly concentrated and a high number of listed companies are family owned. Although the Greek Company Act (GCA) provides for modern forms of GM based on electronic participation or remote voting methods as well as proxy voting, listed companies stick to the traditional methods without a real market for stewardship services. Under the one-share-one vote principle and the application of specific quorum and majority rules (with no general “Majority of Minority rule”) the controlling shareholders have a broad field of action, whereas minority shareholders are restricted to specific minority or individual shareholder rights. Under these circumstances, controversial resolutions, proxy fights and the need to access the Shareholders’ Register are a rather rare phenomenon. The introduction of shareholders’ associations has not altered the situation so far.

Under Danish law, the general meeting is omnipotent, meaning that it can decide on most issues, including issues that deal with day-to-day management of the company. Thus, in theory, shareholders are in a position to ensure that the general meeting decides most issues of concern to them, and the rules on calling a general meeting or proposing topics for the meeting agenda are also rather generous to shareholders. In practice, however, shareholders rarely call a meeting. Although they occasionally propose issues for the meeting agenda, those proposals are almost always voted down by a very high majority. Therefore, the potential for shareholder democracy and activism is not being exploited by shareholders in Denmark.It seems that in normal circumstances, a board will propose agenda items only when the law requires it to do so. We did find, however, that shareholders often ask questions and engage in debate at general meetings. We therefore conclude that shareholder democracy and activism are present in Denmark, although most likely it often takes place as interaction between the board and major shareholders before general meetings are held.

Regulators and commentators around the world are increasingly demanding that institutional investors engage in stewardship with respect to their portfolio companies. Further, the demand for stewardship has broadened from an expectation that investors engage to reduce agency costs and promote economic value to a call for investors to demand that companies serve a broader range of societal interests and objectives. This chapter considers calls for stewardship in the context of the U.S. capital markets specifically as applied to index funds. It argues that, irrespective of the merits of institutional stewardship generally, the structure of index funds and the business environment in which they operate limit their ability to engage in effective stewardship. Although index fund sponsors have had a powerful influence on their portfolio companies, well-intentioned calls for them to play a more significant role and, in particular, claims that they should incorporate non-economic objectives more broadly into their engagement strategy, are in tension with the valuable role that index funds serve in the U.S. markets by providing a low-cost diversified investment option for an increasing segment of ordinary citizens. The chapter concludes by considering the possibility of using pass-through voting to enhance the stewardship potential of index funds.

The Korean Stewardship Code is remarkably similar to the UK Code in terms of language, although it differs significantly in motivation. A major concern in the UK is institutional investorsʼ dormancy in widely held shareholding. Conversely, a primary purpose of stewardship in Korea is to keep controlling shareholders in check, particularly by curbing tunnelling of controlling family members. This chapter elucidates contents, the enforcement mechanism, the features, impacts and implications of stewardship in Korea and its related shareholder activism. A unique feature in Korea is the National Pension Service (NPS), the largest institutional investor in Korea and the worldʼs third largest public pension fund. As a keen advocate of shareholder activism, the NPS acts as a catalyst in spreading stewardship in Korea. However, since it is a quasi-government agency, the concern is that its investee companiesʼ autonomy may be damaged in the name of stewardship. Another concern is that the government may use stewardship as a powerful policy tool to steer the private sector in line with its own socio-political agenda that has less to do with the financial benefits of the NPS’s beneficiaries.

The chapter examines institutional investor stewardship in Malaysia from three perspectives: the code, its context and challenges. It outlines the history and background of Malaysian institutional investor stewardship, culminating in the Malaysian Code for Institutional Investors (MCII). The chapter then analyses the MCII stewardship principles and its oversight in detail. A subsequent section of the chapter appraises the Malaysian stewardship journey by evaluating the adoption of the MCII by asset owners and asset managers through a review of their compliance statements. The chapter further sets out the broader context which these institutional investors operate within. It highlights the prevalence of Government Linked Investment Companies (GLICs) and Government Linked Companies (GLCs), which are arguably a result of Malaysia’s characterisation as an emerging economy and a developmental state. The chapter notes that the impetus for the MCII was driven by industry in accordance with the Corporate Governance Blueprint. However, what constitutes industry in Malaysia is inextricably linked to the state via its ownership and control of GLICs and GLCs. Therefore, apart from concerns about the quality of stewardship statements and ownership engagement, structural issues such as the breadth and depth of state ownership and control of institutional investors challenge effective stewardship practice.

As discussed in earlier chapters, a company has the legal powers and capacity of a individual, in addition to any specific powers conferred by law (s 124). The two key decision-making organs that can act as the company in exercising these powers are the board of directors and the members in general meeting. The general law and Corporations Act divide the company’s powers and responsibilities between these two groups. This chapter discusses this division of powers. Also discussed is how meetings of members and directors are held, and the requirements on companies to prepare and disclose key information, including financial reports.

The value of engaged investors that both support and challenge management

The involvement of companies is key for a sustainable society, but it is debated whether shareholders can stimulate the achievement of corporate sustainability goals. We investigate shareholder sustainability engagement in the Netherlands. First, we present the Dutch corporate law framework in a sustainability context. Dutch corporate law can generally be considered stakeholder-oriented. Afterwards, we present a novel empirical analysis of shareholder corporate sustainability engagement in the Netherlands using Dutch annual general meeting transcripts. We find that, although shareholders do not make use of their right to add proposals to the agenda to advocate corporate sustainability, shareholders do in fact use their right to ask questions. Our findings provide new indications that, in addition to the pivotal role of corporate boards, shareholders may be increasingly willing to play a positive role in corporate sustainability.

I provide an overview of Singapore, Hong Kong, India and Malaysia, focusing on three areas: (i) the legal powers conferred on shareholders; (ii) the concentrated ownership structure and attendant problems; and (iii) shareholder activism.