Shareholders rights and elections can impact how a business runs and ultimately its success. Shareholders are generally associated with big companies, but shareholders can exist in almost any business formation. The Illinois State Board of Investment is a type of business formation that is not traditionally considered a big company, but does have shareholders. When shareholders are present, shareholder rights are also present.
Shareholder rights can include many aspects that affect the business and a recent experiment with the Board of Investment and several other companies illustrated shareholder activism. Although the shareholder rights illustration occurred outside of California, similar situations could occur in a California business.
The shareholder rights experiment was completed with the intention to illustrate the activism of a business’s shareholders. One of the experiment’s implementations addressed the concept of a staggered corporate board. On a staggered corporate board, only a couple of directors are exposed to the shareholder’s voting decisions each year. The experiment suggested the repeal of a staggered board and the implementation of a business’s re-election of its directors on an annual basis to increase business valuation. The experiment indicated this change had a positive effect on the overall business and the results could impact California businesses.
It was argued that staggered corporate boards may not be in a shareholder’s best interest. The idea of increasing shareholder rights by having annual elections may provide shareholders with more attachment and value in connection to the company. Shareholders play a vital role in the success and longevity of a company. An increased relationship that promotes inclusion between a business’s management and its shareholders may benefit everyone, including the overall success of the business.
If you would like to learn more about how shareholders rights and elections can impact how a business runs we invite you to review the strong recommendations of our former clients and contact the Watkins Firm or call 858-535-1511 today for a free consultation with one of our experienced San Diego business attorneys.