The Move from Private Enforcement to Public Enforcement and Now the Move to Litigation Funding of Shareholder Activism: Are We Entering a New Era of Access to Justice in Corporate Law?

Abstract

The focus of this paper is on shareholder activism, concentrating on the UK and Australian experiences. The nature of shares, ownership and control are also addressed. The substance of the article examines the types of shareholder activism that exist. Two key questions are asked regarding shareholder activism: whether it gives rise to conflicts of interest and whether it adds value. The idea of value is an interesting one and gives rise to a discussion of when the activism of minority shareholders should be curbed, so as to prevent oppression through the use of legitimate forms of action for less-than-legitimate ends. The Australian and UK approaches to enforcement of shareholder rights through litigation are contrasted. The rise of class actions for shareholders in Australia, and the lack of equivalent actions in the UK, are discussed. Particular attention it paid to the reasons for the lack of enthusiasm for class actions in the UK. The differing positions and powers of powerful hedge-funds and superannuation investments in the relevant jurisdictions are noted. It is concluded that it is too soon to tell whether the new approach to enforcement of corporate interests through shareholder activism is an improvement over the old remedies which were available to shareholders.