Are you a stockholder in a company? Do you know how your organization is performing? Are you involved in the decision making? Are you an active shareholder?
A share in a company is not only a share in profits but also a share in ownership. Shareholders must realize that their active participation in the company’s operations ensures better management, less frauds and better governance. A management that knows that it will be questioned and held responsible for its actions, is always on its feet.
What is shareholder activism?
The active involvement of stockholders in their organization is shareholder activism. Active participation in company meetings is a healthy practice. Shareholders can ensure that the company follows good corporate governance practices and implements beneficial policies. They can resolve issues laid down in the annual and other general meetings. They can also raise concerns over financial matters or even social causes such as protection of the environment.
Shareholder activists include public pension funds, mutual funds, unions, religious institutions, universities, foundations, environmental activists and human rights groups.
The law in each country gives shareholders rights. For example, in India, shareholders have been granted certain rights under the Companies Act, 1956.
What can shareholder activists do?
Shareholder activism can be exercised through proxy battles, publicity campaigns, shareholder resolutions, litigation and negotiations with management. For example, shareholder activism plays a major role in eradicating apartheid in South Africa through divestment. Shareholders have also influenced the phasing out of polystyrene products at McDonalds. More recently, shareholders were able to bring public pressure and media attention on Home Depot to stop the use of wood from environmentally sensitive areas. In India we have seen similar human rights movements on Dow Chemicals in the Bhopal gas leak case.
What does shareholder activism mean to you?
Establishing dialogue with the management on issues that concern you.
Influencing the corporate culture.
Using the corporate democracy provided by law.
Increasing general awareness on social and human rights issues concerning the organization. Internet and mass media are effective tools in building up pressure on the management.
Are you an active shareholder? Does investment in an organization mean anything more that interest and dividend earnings to you? Do you know of an event where shareholder activism led management to a change of decision?
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