Shareholder Protection and Shareholder Intervention in Kenya: A Study on Shareholder Activism

Abstract

The traditional model of corporate governance precludes shareholders from directly participating and/or intervening in the management of companies. If a shareholder or shareholders in a group, felt aggrieved by the actions of the company‘s management, the main route available to them was to vote against the director‘s involved or the action complained of. If that action also constituted an actionable wrong, then he shareholder(s) could bring a derivative claim.1 This is the model that is currently prevalent in Kenya. This proposed research seeks to question the traditional model of corporate governance and trace the rightful place of shareholders in the management of the companies in which they invest. In essence, the author will argue that directors and senior managers should not be allowed to unilaterally make major decisions and corporate policy with minimal involvement of the investor or shareholder. The aim is to initiate debate around the whole area of shareholder protection against shortcomings of company directors and management and put across a case for shareholder activism in an attempt to further the author‘s hypothesis that shareholders, being the owners of the companies in which they invest, should directly and significantly influence decision and policy making in the those companies