In the years since the financial crisis, shareholder activism has been on the rise around the world. Institutional shareholders are taking a broad range of actions to leverage their ownership position to influence public company behaviour. Activist investors often advocate for changes to the company, such as its corporate governance practices, financial decisions and strategic direction. Shareholder activism comes in many forms, from privately engaging in a dialogue with a company on certain issues, to waging a contest to replace members of a company’s board of directors, to publicly agitating for a company to undergo a fundamental transaction.
Although the types of activists and forms of activism may vary, there is no question that shareholder activism is a prominent, and likely permanent, feature of the corporate landscape. Boards of directors, management and the markets are now more attuned to and prepared for shareholder activism, and engaging with investors is a priority for boards and management as a hallmark of basic good governance.
Shareholder activism is a global phenomenon that is effecting change to the corporate landscape and grabbing headlines around the world. Although shareholder activism is still most prevalent in North America, and particularly in the United States, activism campaigns directed at non-US companies now represent approximately half of global activism activity. This movement is being driven by, among other things, a search by hedge funds for diversified investment opportunities and a cultural shift towards increased shareholder engagement in Europe, Australia and Asia.
Boosted by record activity levels in the first quarter of 2022, global activism activity has returned to pre-pandemic levels despite continued market volatility and uncertain macroeconomic conditions. Looking forward, activism activity is generally expected to remain strong, particularly in Europe and Asia, and shareholder activists are expected to remain focused on environmental, social and political considerations and corporate governance as well as company operating performance.
As shareholder activists and the companies they target continue to be more geographically diverse, it is important for legal and corporate practitioners to understand the legal framework and emerging trends of shareholder activism in the various international jurisdictions facing activism. The Shareholder Rights and Activism Review is designed to be a primer on these aspects of shareholder activism in such jurisdictions.
My sincere thanks go to all of the authors who contributed their expertise, time and labour to this eighth edition of The Shareholder Rights and Activism Review. As shareholder activism continues to diversify and increase its global footprint, this review will continue to serve as an invaluable resource for legal and corporate practitioners worldwide.
Francis J AquilaSullivan & Cromwell LLP New YorkAugust 2023