Shareholder activism—a rising global tide

Shareholder activism—a rising global tide

Corporate analysis: Taking a look at the continuing rise in shareholder activism, Nick O’Donnell, partner at Baker McKenzie, considers current trends and how in-house lawyers might respond in light of the recently published update to FTI Consulting’s global shareholder activism map.

Original news

New research by FTI consulting has found the UK is exposed to a high risk following an increase in investor activism outside the United States. Alongside Canada and Australia, FTI believes a strong US dollar, undervalued asset prices and increased global scrutiny of corporate governance standards has made the UK a possible target for activist investors.

What are the key findings of this latest update?

The update, which was published on 16 February 2017, confirms the long-term trend of shareholder activism growing in frequency and geographic breadth. While shareholder activism was once seen as primarily a US market feature, it is now a clearly established part of the corporate environment in many countries. For instance, the update states that 342 activism campaigns took place outside the US last year, compared to only 70 in 2010.

The research shows that, outside the US, shareholder activism is most prevalent in Australia, Canada and the UK. It attributes this primarily to changing economic factors including a strong US dollar, undervalued asset prices, together with increased scrutiny of corporate governance standards in those countries.

Interestingly, it also reports a rise in activism in Japan and China. Like activism in Europe in the recent past, Chinese activism is generally perceived to be short-term. In Japan, in contrast, driven by the 2015 changes to the Japanese corporate governance code, campaigns are more likely to look longer-term.

What does ‘shareholder activism’ mean, and what are the common goals?

In recent years the political and legal climate in many countries has facilitated greater shareholder engagement for the benefit of both companies and their stakeholders overall. In the UK, this has been encouraged by developments

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