Control by the general meeting through the powers to appoint and remove directors : a comparison of the laws of U.K., U.S.A. and Germany

This work is a comparative study of shareholders' powers to appoint and remove directors in the United Kingdom, United States and Germany as an internal corporate control mechanism. It highlights the entrenched positions of corporate managers in the face of shareholders' weakening powers in these systems. Having recognised the importance of shareholders' position as the contributors of corporate capital, the laws of these three systems give them the right to bring about changes in the control of companies by vesting power in the general meeting to determine the composition of corporate boards. Shareholders appoint directors to act on their behalf, the board in turn selects and monitors its executives to ensure that the interests of shareholders and other stakeholders are protected. The Anglo-American system is characterised by dispersed shareholding and management dominated boards, with the result that shareholders do not exercise their voting rights effectively. Under the German two-tier board system companies are accountable to a wide range of stakeholders and have a different structure of shareholding, where banks control the majority of shares. Despite the absence of management-dominated boards in that system the depository share system together with the practice of co-determination tend to restrict shareholders' participation in corporate control. The reality is that directors may end up using certain devices to entrench themselves on the board so as to restrict the ability of shareholders to remove them. This thesis advocates a greater role for shareholders through improved opportunities for them to use their voting powers in determining the composition of their boards. It makes various recommendations in the different areas in which shareholders face difficulties in exercising these powers. It is hoped that the implementation of these suggestions will result in a system which will enable shareholders to exercise their voting powers more effectively for the purpose of controlling their companies