The Power of the Shareholder

Apr 18, 2016
Last week’s vote by the shareholders of BP at the BP’s Directors Remuneration Report was one for the history books. Its thought that only in one other time in recent history have shareholders voted against the Board in a company as large as BP. The shareholders categorically voted no to the 20% increase in the Boards’ pay, with 60% voting against – a clear signal and reminder that shareholder interests cannot be ignored. 

Shareholders and Directors are wholly different roles in a company, although its true that you can be both a shareholder and a director at the same time. The role of the shareholder can be to provide capital in exchange for purchasing shares, as well as the right to financially benefit from the company’s success. They also have the responsibility to comply with various requirements of the Companies Act 2006, which includes but not limited to voting on particular decisions that Directors are not entitled to do. 

Directors have a slightly different role in that they are charged with the every day decision making of the company, within the company’s constitution and asking shareholders to make various decisions if the Director is not entitled to make the decisions required for the running of the company. 

Last week’s ‘no vote’ highlights that shareholders are very much a voice of the company that must, and shall be listened to. This vote was not binding on the company, but its certainly left BP in an embarrassing position, which they have to address in order to mitigate further shareholder disgruntles. 

Nicola Lucas

About the author

Nicola Lucas

Nicola is a member of our Business Law Team handling all the commercial requirements of her clients such as shareholder agreements and negotiating on commercial ...

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