Corporate Governance 5e

Christine A. Mallin

Chapter 4
Shareholders and Stakeholders

© Christine A. Mallin 2016

 Learning objectives

• To understand the difference between

shareholders and stakeholders
• To be aware of the various different
stakeholder groups
• To have an overview of the way that
shareholders and stakeholders are provided
for in various corporate governance codes
and guidelines

Mallin: Corporate Governance, 5th edition

 Learning objectives

• To understand the roles that shareholders

and stakeholders can play in companies and
the development of corporate governance

Mallin: Corporate Governance, 5th edition

 Shareholders

• The term ‘shareholders’ may seem quite

straightforward but shareholders may be
individuals, institutions, firms, or other entities
that own shares in a company.
• In the UK and US there is a predominance of
institutional shareholders: for example,
pension funds, insurance companies, mutual
funds.

Mallin: Corporate Governance, 5th edition

 Stakeholders

• The term ‘stakeholders’ can encompass a

wide range of interests: it is any individual or
group on which the activities of the company
have an impact.

Mallin: Corporate Governance, 5th edition

 Stakeholders

Stakeholders (apart from shareholders)

include:

- employees - providers of credit

- customers - government
- suppliers - local communities
- interest groups

Mallin: Corporate Governance, 5th edition

 Guidance on shareholders’ and
stakeholders’ interests
• OECD (1998, 1999, 2004, 2008, 2014, 2015)
• RSA Tomorrow’s Company (1995),
Tomorrow’s Investor (2008, 2010)
• Hermes Principles (2002, 2006, 2010)
• Companies Act (2006)
• King Report (2002, 2009)

Mallin: Corporate Governance, 5th edition

 Guidance on shareholders’ and
stakeholders’ interests
• EU Accounts Modernization Directive (2004,
2006)
• EU A renewed EU strategy 2011-14 for
Corporate Social Responsibility (2011)
• EU Action Plan: European company law and
corporate governance - a modern legal
framework for more engaged shareholders and
sustainable companies (2012)
• EU Commission (2014) The Promotion of
Employee Ownership and Participation

Mallin: Corporate Governance, 5th edition

 Guidance on shareholders’ and
stakeholders’ interests
• In UK and US, emphasis is on the
relationship between directors and
shareholders
• In contrast, the German and French corporate
governance systems give more emphasis to
stakeholders, especially employees

Mallin: Corporate Governance, 5th edition