Control by the general meeting through the powers to appoint and remove directors : a comparison of the laws of U.K., U.S.A. and Germany.
This work is a comparative study of shareholders' powers to appoint and remove
directors in the United Kingdom, United States and Germany as an internal
corporate control mechanism. It highlights the entrenched positions of corporate
managers in the face of shareholders' weakening powers in these systems.
Having recognised the importance of shareholders' position as the contributors
of corporate capital, the laws of these three systems give them the right to bring
about changes in the control of companies by vesting power in the general
meeting to determine the composition of corporate boards. Shareholders
appoint directors to act on their behalf, the board in turn selects and monitors its
executives to ensure that the interests of shareholders and other stakeholders
The Anglo-American system is characterised by dispersed shareholding and
management dominated boards, with the result that shareholders do not
exercise their voting rights effectively. Under the German two-tier board system
companies are accountable to a wide range of stakeholders and have a different
structure of shareholding, where banks control the majority of shares. Despite
the absence of management-dominated boards in that system the depository
share system together with the practice of co-determination tend to restrict
shareholders' participation in corporate control. The reality is that directors may
end up using certain devices to entrench themselves on the board so as to
restrict the ability of shareholders to remove them.
This thesis advocates a greater role for shareholders through improved
opportunities for them to use their voting powers in determining the composition
of their boards. It makes various recommendations in the different areas in which
shareholders face difficulties in exercising these powers. It is hoped that the
implementation of these suggestions will result in a system which will enable
shareholders to exercise their voting powers more effectively for the purpose of
controlling their companies.