Shareholder participation in Corporate Governance

Abstract

Corporate governance is a wide term defined in different ways by commentators. In essence it relates to the manner in which corporations are regulated and managed.1 Principles of good corporate governance are usually entrenched in self-regulatory codes.2 It is widely recognised that shareholders can, and should, play an important, albeit limited,3 role in ensuring that companies adhere to sound and effective corporate governance standards. Institutional shareholders in particular can be a highly effective mechanism through which sound corporate governance can be ensured. In this article we focus on the codes of best practice of South Africa and Australia and on the role that institutional investors, like pension funds and unit trusts, should have in ensuring sound corporate governance practices. The article examines the perceived difficulties relating to the involvement of institutional shareholders in company management.