Research Handbook on Shareholder Power
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Research Handbook on Shareholder Power

Edited by Jennifer G. Hill and Randall S. Thomas

Much of the history of corporate law has concerned itself not with shareholder power, but rather with its absence. Yet, as this Handbook shows, there have been major shifts in capital market structure that require a reassessment of the role and power of shareholders. This book provides a contemporary analysis of shareholder power and considers the regulatory consequences of changing ownership patterns around the world. Leading international scholars in corporate law, governance and financial economics address these central issues from a range of different perspectives including historical, contemporary, legal, economic, political and comparative.
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Chapter 13: Independent directors and controlling shareholders around the world

Guido Ferrarini and Marilena Filippelli


Independent directors originated in dispersed ownership systems in order to strengthen the monitoring role of the board, as widely shown by comparative law scholarship (Hopt 2011). Over time independent directors have become one of the key international standards and exist in most corporate governance systems around the world. However, corporate scholars generally focus on independent directors in the US and the UK, mainly considering diffuse ownership companies. As a result, the role and impact of independent directors in corporations with controlling shareholders are less frequently analyzed. In this chapter, we examine independent directors as a legal transplant from dispersed ownership systems to other systems where controlled corporations are prevalent. Our main thesis is that independent directors have a different and relatively narrower role to perform in controlled corporations. We also argue that in the law and practice of controlled corporations, independent directors often play an even weaker role than economic theory would predict. In order to prove our thesis, we explore differences in legal regimes applicable to independent directors across countries and differences in the role that the latter play in jurisdictions where controlled corporations dominate. We show, in particular, that several jurisdictions only pay lip service to the concept of independent directors as a central governance mechanism in listed companies.

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