Increased corporate governance powers of shareholders and regulators and the role of the corporate regulator in enforcing duties owed by corporate directors and managers
Two related developments influencing the globalisation and internationalisation of corporate law and corporate governance are the increased powers that have been granted to shareholders and regulators. An example is the increased powers granted to shareholders over executive remuneration. These developments are related because when legislatures empower shareholders and regulators they typically do this as a way of constraining management power. It is possible to discern a trend in a number of countries to grant increased powers to shareholders and regulators. Such a trend was evident before the recent financial crisis but the crisis has accentuated the trend. Research that I and colleagues have undertaken suggests that, in the case of shareholder empowerment, this trend is stronger in Australia than in other countries. I examine the argument that underlies recent corporate law reform – that one way of responding to corporate collapses and failures in corporate governance is to empower shareholders and regulators.
As part of this analysis, I address the following “key area of focus” (c)(i) – the role of the corporate regulator in enforcing duties owed by corporate directors and managers. I focus on the Australian Securities and Investments Commission which, in recent years, has had a very prominent role in bringing actions for breaches of duty against corporate directors and managers. I examine the advantages and disadvantages of public and private enforcement of directors and officers duties.