Capital market, regulatory and technological developments have created investor appetite and capacity for engagement with public companies. Our paper explores key engagement mechanisms and techniques employed by public company shareholders. First, shareholder-company engagement is a multi-dimensional, evolving phenomenon. Shareholders use a range of techniques including shareholder meetings, behind-the-scenes interactions, public campaigns, and online technologies. Second, shareholders mix and match different engagement techniques to leverage governance influence. Third, shareholders increasingly undertake their engagement activities collectively, highlighting growing capacity to overcome traditional collective action challenges. Finally, the shareholder meeting remains an important engagement mechanism. Its formal, in-person and public nature sets it apart from other mechanisms and gives it unique potential as a forum for scrutiny and accountability. Although low attendance rates indicate that shareholders do not routinely utilise the meeting to maximum effect, it is better conceived as having contingent significance because its potential as an accountability mechanism can prove critical when a company experiences serious governance problems.

This chapter explores the intersection of transnational law with contemporary corporate governance laws and principles. Corporate governance, with its complex array of public and private actors, fits naturally within the modern concept of transnational law as a species of law that "can no longer be viewed through a purely national lens." Financial markets today are global and interconnected and events, such as the 2007-2009 global financial crisis and the COVID-19 crisis, exemplify the risk of contagion across those markets. Not only can corporate governance problems transcend national boundaries, so too can their solutions, which often involve regulatory efforts that operate at a transnational level. The chapter explores, from a transnational perspective, the transmission of laws and norms that are designed to constrain directors’ conduct and enhance corporate accountability. It focuses on two key examples of such accountability mechanisms-fiduciary duties and corporate codes. The chapter examines, for example, the global transmission of corporate governance and shareholder stewardship codes. These codes, which are a relatively recent phenomenon, play an important role as “norm creators.” The chapter assesses the transmission of laws and norms against the backdrop of convergence and path dependence theories of corporate governance.

The growth of shareholder stewardship codes around the globe reflects a belief that greater engagement by institutional shareholders improves corporate decision-making and protects against excessive risk-taking. In theory, there is considerable sense in shareholders undertaking their stewardship activities collectively, to leverage their power, pool resources and share costs, making stewardship more feasible and less speculative. This chapter examines collective action in Australia, which constitutes a nuanced corporate governance practice. Evidence indicates that investors do not routinely engage in direct forms of collective action, preferring to leverage their collective influence through intermediary organizations that undertake behind-the-scenes engagement activities for investors. The nuanced image emerging from the Australian experience highlights that collective action by institutional shareholders is by no means a simple governance phenomenon. This chapter explores the implications of this insight for how securities and takeover laws apply to collective action, and how the issuers of stewardship codes frame their codes’ expectations regarding collective action.

Business history and theory reflect a tension between public and private conceptions of the corporation. This is embodied in the famous Berle-Dodd debate, which provides the basis for contemporary clashes between “different visions of corporatism,” such as the conflict between shareholder primacy and stakeholder-centered versions of the corporation. This chapter examines a number of recent developments suggesting that the pendulum, which swung so clearly in favour of a private conception of the corporation from the 1980s onwards, is in the process of changing direction. The chapter provides two central insights. The first is that there is not one problem, but multiple problems in corporate law, and that different problems may come to the forefront at different times. The second insight is that corporate governance techniques (such as performance-based pay), which are designed to ameliorate one problem in corporate law, such as corporate performance, can at the same time exacerbate other problems involving the social impact of corporations.

Introduction

Although Australia technically has a state-based system of corporate law, the primary legislation, the Corporations Act 2001 (“Corporations Act”), effectively operates as a “federal” rule. This is due to a reference by each state of its powers relating to corporations to the federal government. This broad referral of powers constituted an attempt to unify and harmonize corporate law rules and improve corporate efficiency in Australia.

In spite of this statutory centralization, Australian corporate governance is highly fragmented and occurs “in many rooms.” During the 1990s, the emergence of “corporate governance” as an ubiquitous commercial goal coincided with a deliberate withdrawal from direct regulation by the government. Yet, since that time, Australian corporate law has been the subject of almost continual statutory reform. Not everyone views this dynamic and evolving regulatory picture in a positive light. A former Australian judge has stated, for example, that these reforms have “added substantial . . . complexity” and “created obfuscation” in the area of corporate law. The ongoing focus on good corporate governance in the commercial realm has also contributed to this intricate regulatory picture.

Introduction

Australia provides an intriguing case study in relation to the global financial crisis. At first sight, at least, Australia appears to have withstood the crisis remarkably well, living up to its famous description as “the lucky country.” This has been the source of numerous laudatory statements by government officials and others throughout the global financial crisis. In 2008, the Governor of Reserve Bank of Australia commented, for example, that “there would be very few countries, if any, which would not envy Australia's fiscal position.”

Although the impact of the financial crisis has been less severe in Australia than in many other jurisdictions, including common law jurisdictions such as the United Kingdom and the United States, it cannot be said that Australia escaped the crisis unscathed. There were, for example, a number of high-profile corporate collapses. Also, more recently, messages concerning the state of the Australian economy have become decidedly mixed. There is a growing perception that economic performance is uneven, and that there exists a widening “two speed” or “multi-speed” economy, where “not everybody. . . is in the fast lane.” This refers to the fact that, in contrast to Australia’s booming resources sector, large segments of the economy have experienced weak consumer spending in recent times.