Anglo US Model

Anglo-US Model of Corporate
Governance
The Anglo-US Model
 This is a shareholder oriented model. It is
also called Anglo-Saxon approach to
corporate governance.
 Directors are rarely independent by
management.
 Clear separation of ownership and
management.
 Institution investors like banks and mutual
funds are portfolio investors.
 Have tight disclosure norms against insider.
Key Players
Includes management, directors, shareholders, government
agencies, stock exchanges , self regulatory organizations and
consulting firms.
“Corporate governance triangle”
 The Anglo-US model, developed within the context of the

free market economy.
 The cost of this separation of ownership and control is
defined as “agency costs”.
Share Ownership
In both the UK and the US, there has been a
marked shift of stock ownership.
 In 1981, individuals held 38 percent.
 In 1990, institutional investors held
approximately 61 percent of the shares of UK
corporations and individuals held approximately
21 percent.
 In 1990, institutions held 53.3 percent of the
shares of US corporations.
Composition of the Board of Directors
The board of directors of most corporations that

follow the Anglo-US model includes both
“insiders” and “outsiders”.
 An “insider” is as a person who is either
employed by the corporation (an executive,
manager or employee) or who has significant
personal or business relationships with
corporate management.
 An “outsider” is a person or institution which
has no direct relationship with the corporation
or corporate management.
Regulatory Framework
 In the US, a federal agency, the Securities and
Exchange Commission (SEC), regulates the
securities industry.
 In 1988, the agency of the Department of Labor
responsible for regulating private pension funds
ruled that these funds have a “fiduciary
responsibility” to exercise their stock ownership
rights.
 The regulatory framework of corporate
governance in the UK is established in
parliamentary acts and rules established by self-
regulatory organizations, such as the Securities
and Investment Board.
Disclosure Requirements
US corporations are required to disclose a wide range of information. The
following information is included either in the annual report or in the agenda
of the annual general meeting (formally known as the “proxy statement”):
 Corporate financial data
 A breakdown of the corporation’s capital structure.
 Substantial background information on each nominee to the board of
directors.
 The aggregate compensation paid to all executive officers .
 Individual compensation data for each of the five highest paid executive
officers.
 Information on proposed mergers and restructurings.
 Proposed amendments to the articles of association.
 Names of individuals and/or companies proposed as auditors.
Corporate Actions Requiring Shareholder
Approval in the Anglo-US Model
The two routine corporate:

 elections of directors
 appointment of auditors.
Non-routine corporate actions includes:

 the establishment or amendment of stock option plans
 mergers and takeovers
 restructurings
 amendment of the articles of incorporation.
Corporate Actions Requiring
Shareholder Approval
There is one important distinction between the US and
the UK:
 In the US, shareholders do not have the right to
vote on the dividend proposed by the board of
directors.
 In the UK, shareholders do vote on the dividend
proposal.
The Anglo-US model also permits shareholders to

submit proposals -known as shareholder proposals.
In the US, the SEC has issued a wide range of
regulations concerning the format, substance, timing and
publication of shareholder proposals.
Interaction Among Players
The Anglo-US model establishes a complex, well-

regulated system for communication and
interaction between shareholders and
corporations.
Shareholders may exercise their voting rights
without attending the annual general meeting in
person. All registered shareholders receive the
following by mail includes:
 the agenda for the meeting including background
information an all proposals ("proxy statement")
 the corporation’s annual report
 a voting card.
Interaction Among Players
In the Anglo-US model, a wide range of institutional
investors and financial specialists monitor a
corporation's performance and corporate
governance. These include:
 a variety of specialized investment funds
 venture-capital funds, or funds that invest in new
or "start-up" corporations
 rating agencies
 auditors
 funds that target investment in bankrupt or
problem corporations.
Group Members:
 Rhonalyn Malabunga  Mary Richelle
 Marjorie Garilao Freires
 Zara Elida  Allondra Cocadiz
 Russelyn Viray  Laila Salanda
 Arjay De Luna  Isces Kamil
 John Paulo Recto Quiambao
 Rowellyn Conchada  Georgie Mayuga
 Dhianne Hugis
 Christopher Cortez

Anglo US Model

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Anglo-US Model of Corporate

 The Anglo-US model, developed within the context of the

The board of directors of most corporations that

The two routine corporate:

Non-routine corporate actions includes:

The Anglo-US model also permits shareholders to

The Anglo-US model establishes a complex, well-

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