• It is the Board of directors of each company that is legally responsible for the governance of the company
  • The shareholder’s role in corporate governance is to appoint the directors (and the auditors where required) and to satisfy themselves that an appropriate governance structure is in place

Divorce between ownership and control

  • The divorce between ownership and control happens when the owners of a business do not control the day-to-day decisions made in the business
  • The majority of shareholders in public companies are not involved in any way with operational decision-making by the companies in which they have invested.

Handling issues caused by the divorce between ownership and control

  • Ensure that financial rewards and incentives offered to managers are aligned with shareholder interests
  • Implement suitable corporate governance procedures to ensure shareholders are protected as far as possible
  • Company legislation ensuring that Directors are accountable for their actions to shareholders