Good Governance Case Number 2 Share Holder Activism

Shareholder Activism in the Philippines
The Philippines still lags behind most of its neighbors in protecting the rights of minority
shareholders in corporations, making the country’s equity market less attractive to potential
investors.
In a briefing, Shareholders’ Association of the Philippines (SharePhil) said the lack of

shareholder “activism” in the country allowed corporations to ignore good corporate governance
practices.
The result is that investors, who entrust their hard-earned money to company managers, rarely
get a voice in decision-making or even the chance to question a corporation’s actions.
“Other countries have investor groups that are very active in participating in company affairs.
When minority investor groups are solid, they get louder voices,” SharePhil chairperson Evelyn
Singson said.
She said the main advocacy of the newly formed group would be to educate investors of their
rights and duties as part owners of corporations.
The group wants to make sure that minority investors are no longer kept in the dark about the
details of the operations of both listed and privately held companies, Singson said.
Also, lack of investor protection has made the country a less attractive investment destination
compared to its neighbors, said Francis Lim, former president of Philippine Stock Exchange and
one of SharePhil’s trustees.
“There is the perception that companies are not up to corporate governance standards,” Lim
said.
SharePhil also stressed the need to educate new investors such as housewives, overseas
workers and retirees on how to invest in stocks to make their money work for them and, in the
process, help pump-prime the economy.
MARJORIE L. SEDROME BS-ENTREPRENEURSHIP
Questions:
1. Do you believe that at this point in time that our country needs more Shareholder
Activism? If you agree or disagree with the article, state your reason.
As I noted, our country requires more shareholder activism because, as stated in

the article, “the lack of shareholder activism in the country allowed corporations to ignore
good corporate governance practices.” Shareholder Activism and Corporate Governance
will shed unbiased light on the behaviors of a company that make it an appealing activist
target, such as its governance structure and strategic and management approaches.
Thus, by exercising their ownership rights, shareholders can exert influence on corporate
governance. It aids in safeguarding stakeholders' interests and improving management
efficiency. Furthermore, key strategies for it include proxy battles, negotiations, public
campaigns, shareholder resolutions, and litigation.
2. Given that you have the ownership and the right leverage to change a certain
company in our country, what aspects in the Philippine setting do you believe
requires change for us to reach corporate governance standards? Explain your
answer for each aspect.
To reach corporate governance standards, the following aspects should be changed
● Accountability
- Boards of directors should be accountable to the groups and individuals
affected by their actions, such as shareholders, stakeholders, vendors,
employees, and the general public.
● Transparency
- Good corporate governance reflects the transparency and accessibility of
records and processes to the shareholders and stakeholders. Financial
records should not be exaggerated or inflated. They must be presented to
shareholders and stakeholders in a way that allows them to truly
understand and interpret the findings. Transparency entails informing
stakeholders of the individual who can answer questions and explain
reports if necessary.
● Equity and Inclusiveness
- Each board director is given an equal seat at the table. Each director has
the ability and responsibility to use their voice to share their experiences,
opinions, and viewpoints in order to strengthen and expand discussions.
Nobody should feel excluded or as if their opinions are less important
than those of others.
● Prioritize Risk Management

- Every board should put in place an effective risk oversight and
management system. Risks are not limited to compliance issues. It is a
broader term which combines all of the risks to the company, for instance
financial problems, climate change, computer hackers, and other risks
outside the compliance with law and policy requirements. Better
decision-making and accurate cost-benefit or risk-reward decisions result
from effective risk management.
3. What do you think are the advantages and disadvantages of Shareholder Activism,
given that it is strongly utilized in our country.
In our country, the benefit of shareholder activism can result in positive

change. Companies are frequently the targets of shareholder activism as a result of poor
financial performance, Environmental and social deficiencies, and ignoring shareholder
concerns. Shareholder activism can result in corporate accountability and positive
change for shareholders. The negative of shareholder activism is that it is not always
favorable, as it can have a negative long-term impact. According to research, activist
companies often experience an immediate increase in value, followed by a decrease in
the future, following hedge fund activism. Long-term investors may face difficulties as a
result of this.

Good Governance Case Number 2 Share Holder Activism

Uploaded by

Document Informationclick to expand document information

Copyright:

Available Formats

Good Governance Case Number 2 Share Holder Activism

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Good Governance Case Number 2 Share Holder Activism

Uploaded by

Copyright:

Available Formats

Shareholder Activism in the Philippines

In a briefing, Shareholders’ Association of the Philippines (SharePhil) said the lack of

As I noted, our country requires more shareholder activism because, as stated in

To reach corporate governance standards, the following aspects should be changed

● Prioritize Risk Management

In our country, the benefit of shareholder activism can result in positive

You might also like