Is our company law stuck in the era of chimneys?
From February 23, 2017
Our current corporate governance systems are largely the product of the industrial era, and may not fully reflect the current dynamics among corporate constituencies. The relationships among corporate constituencies have changed with rapid technological development. The value of companies, especially in the tech sector, increasingly depends on the expertise of managers and personnel. Also, the structure of corporations may need to be changed quickly – by combining businesses and technologies – to maintain competitiveness in a dynamic environment.
In these circumstances the traditional role of shareholders as the “owners” of the corporation has come under pressure. It is vital that businesses can quickly adapt to changes in the technological and market environment, and shareholders may not, in fact, be in the position to decide on the best use of corporate assets as this environment changes rapidly. The investments made by shareholders need to be protected by corporate law, but the means for doing so may need to change. The balance between “voice” and “exit” rights may need to be reappraised – so that businesses can efficiently be developed while protecting the interests of different corporate constituencies.
A brief article on this topic was published in the Finnish business weekly Arvopaperi.