SHAREHOLDER ACTIVISM IN THE UK

History and Recent Development in Shareholder Activism in the UK

History and Recent Development in Shareholder Activism in the UK

Introduction

There is a notified increasing trend for the shareholders in publicly listed companies, irrespective to the strong or weak economies, to make their views recognized. The recognized views in some cases are emphasized through direct actions. The shareholder action wave is encouraged by to changes in UK corporate laws, with the motive to assist shareholders and create balance between shareholders and management. An essential weapon in an activist's arsenal is the inclination for the use of the public domain as a forum for commencing change (Brown, 2010, pp. 1-3).

The professional advisor role and well- organized strategy for public relations can prove to be enormously valuable, when taking into account these issues to the activist shareholders along with the company's board. While going public, it involves the activist shareholders to understand the framework of regulations, in which they would be in commission. Shareholders, who are adopting this approach, need to comply with the regulatory system, specifically insider dealing regimes and market abuse (Wessing T., 2012, pp. 1-5).

Shareholder activism in particular describes the approaches undertaken by the shareholder or group of shareholders to the board of the company for seeking changes in behaviour of the company. Management of the company is conscious that if their performance detrained due to their management is not beneficial for the shareholders, as well. However, if the performance of management is exceptional in their view, it is likely of the concurrence with the shareholders. Shareholders show trust in the management to do their best and supports them in return; however it the performance is below par over the period of time, it gives birth to the shareholder activism.

Where activist has numerous weapons in their arsenal, their management has numerous counter measures for their defence. No matter, what tools and tactics employed by both the parties, victory lies with the party, which is most influential. It has been documented in history that massive defeats can be avoided by petite offering of concessions at the outset. Thus, management on the initial shareholder activism should not be rigid by calming the company's way or the highways strategy. The preliminary step by the company should be the indulgence in dialog with the activist, which enables the management to understand the concern rose, despite it also, allows management to resolve the matter by simple and easy elucidation.

There are some reasons that investors want to persuade the activism of shareholder, which includes: ensuring of the changes in the board of the company; to acquire the capital return; ensuring a varied corporate strategy, convinced for the realisation of the improved profitability and performance, like in quest of the recognition of value by de-merging businesses; to enhance the efficiency of the company by procuring the discard of the assets that are under performing; in search of specific interest; like alienation of groups with moral, environmental or social ...