Contemporary corporate governance issues Essay Example | Topics and Well Written Essays - 2750 words - 1

Contemporary corporate governance issues - Essay Example The emergence of the concept shareholders value arose from the concept of separation of ownership and control which is also known as fragmentation of ownership. The concept focussed on how the owners of the company usurp the company’s profits for personal interest. The concept of shareholders emerged to enhance the betterment of the company. The relationships between the banks and the companies in UK prevented concentrated share ownership of certain companies in UK. The prevalent laissez –faire policy in the UK focussed on the non economic interest of the company and wanted to underpin the emerging corporate economy. There were sudden changes in the policies of the company where there was minimum government intervention and the concept of shareholders value evolved. The concept revolved around the fact that individual private owners of the company are the shareholders of the company, and managers have to act in accordance with their decisions. Whenever shareholders were unavailable for decision making in a meeting, the managers of the company would make the decisions on the shareholders behalf (European Investment Bank, 2012c). This ensured that the divergence between the interests of shareholders and managers did not become too extreme. The modern day business practices regard shareholders as the owners of the company. They usually buy the shares of the company (European Investment Bank, 2012a). There is no specific amount of shares that need to be bought in order to become a shareholder of the company. Shareholders can exercise their voting rights in the company. There are some exceptions, like the Kuala Lampur Stock Exchange prohibits the shareholders from exercising their voting rights. Shareholders regard the annual meeting as a serious event as they can question the management regarding issues which are pertaining to the company and are included and excluded in the annual report.