The Fat Controller - Slimming Down the Excesses of Controlling Shareholders in UK Listed Companies

31 Pages Posted: 23 Oct 2017 Last revised: 26 Oct 2017

See all articles by Bobby Reddy

Bobby Reddy

Faculty of Law, University of Cambridge

Date Written: July 18, 2017

Abstract

It has become fashionable to extoll the benefits of an incumbent controlling shareholder in companies. Indeed, many of the failures of the stewardship movement, that encourages shareholders in UK listed companies to take an interventionist approach to their investments, have been blamed on the prevalence of dispersed and fragmented ownership models. However, in the publicly listed company sphere, it is debatable whether the virtues of controlling shareholders outweigh the potential detriments, as evidenced by the corporate governance travails of Sports Direct International plc. This paper summarises the principal inherent benefits and detriments, and how these may have presented themselves in the experience of Sports Direct International plc; followed by a normative analysis of the effectiveness of certain regulations ostensibly created to constrain controlling shareholders, together with proposals for reform, arguing that the existing regulations have proved to be insufficient in constraining the controlling shareholder of Sports Direct International plc.

Keywords: Controlling shareholders, Sports Direct, Independent Directors, Related Party Transactions, Listing Rules, Corporate Governance Code

JEL Classification: G30, G32, G34, G38, K22

Suggested Citation

Reddy, Bobby, The Fat Controller - Slimming Down the Excesses of Controlling Shareholders in UK Listed Companies (July 18, 2017). University of Cambridge Faculty of Law Research Paper No. 47/2017. Available at SSRN: https://ssrn.com/abstract=3056999 or http://dx.doi.org/10.2139/ssrn.3056999

Bobby Reddy (Contact Author)

Faculty of Law, University of Cambridge ( email )

10 West Road
Cambridge, CB3 9DZ
United Kingdom

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