Shareholders' rights and the acquisition of control in a company

Abstract

The shareholders in general meeting and board of directors are the main governing organs of a company. Control of the general meeting theoretically ensures control of the composition of the board of directors who are usually empowered by the articles to manage the day-to-day administration of the company. The company acts by shareholders and directors voting and passing resolutions in general meeting and board meetings respectively. Controlling sufficient votes to pass resolutions in general and board meetings is therefore the essence of corporate control. A shareholder's right to vote in general meeting is a proprietary legal right, severable from the other incidents of share ownership. By aggregating voting rights, or limiting the scope of the voting rights of some shareholders, or restricting ownership of voting rights to certain specified persons, voting control in the general meeting may be acquired.