The Perception and Adoption of Shareholder Activism in Banks: The Case of Mauritius

Abstract

ABSTRACT Shareholder activism has gained recognition globally, favoring greater strides and relegating the days of shareholders giving up and selling their shares to express their dissatisfaction. However, a proper legal and regulatory framework is required to formalize and promote the concept of shareholder activism to achieve positive results. Hence, the purpose of this research was to firstly investigate the perception of banks’ executives on this concept in Mauritius and to seek the level of adoption and practice of shareholder activism within banks. Secondly, this research aimed at suggesting recommendations to Mauritian stakeholders in order to enhance the legal and regulatory framework surrounding shareholder activism. A survey in the form of a questionnaire and an interview was conducted with banks’ executives, and a comparative study was also carried out on the relevant Mauritian laws and the corresponding legal and regulatory framework of the UK and South Africa each. The research found that shareholder activism is being moderately practiced by banks’ shareholders due to the inability to devise proposals on managerial issues. Consequently, this research recommends the adoption of a shareholder’s governance code, the establishment of a shareholder’s forum, reinforcement of shareholders’ proposals and the formation of a national commission to support shareholder activism.