Shareholder activism
Shareholder activism

The following Corporate practice note provides comprehensive and up to date legal information covering:

  • Shareholder activism
  • Shareholder activism in the UK
  • What is it?
  • Aims of activists
  • Companies/industries susceptible to activism
  • Recent trends in UK shareholder activism (Market Tracker Trend Report, September 2020)
  • Strategies and tools commonly used by activists
  • Stake building
  • Garnering support from other shareholders
  • Right to requisition a general meeting
  • More...

This Practice Note examines shareholder activism in UK companies with a premium or a standard listing of equity shares on the London Stock Exchange (a listed company) and companies whose shares are admitted to trading on AIM (an AIM company), including the nature of activism, the aims and strategies of shareholder activists and the tools they employ to effect the changes they seek. It also considers actions companies can take to reduce the risk of, and combat, shareholder activism.

Shareholder activism in the UK

What is it?

Shareholder activism can vary from shareholders refusing to pass resolutions (eg, in relation to directors' re-election or remuneration packages) to protracted public media driven campaigns to bring about significant changes to the company's management or operations. The driving force behind shareholder activism is often increasing the value of, or extracting value from, the company, and motives can be short-term or long-term in nature.

Traditionally, shareholder activism was largely an issue for US companies only or companies with private equity investors who were looking to extract as much value as possible from a company before moving on to the next company, often to the detriment of the company and its long term shareholders. In the media, activist conduct was often portrayed in a negative light, eg, some investors were viewed as 'vulture capitalists'.

However, since the global financial crisis, shareholder activism has increased

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