Historical Context and Codification of Corporate Governance

The UK governance system privileges shareholder rights as residual claimants on the profits of the corporation. But law constrains these rights to produce what has been called an “enlightened shareholder” regime for corporate control. Yet it is the decline of owners’ rights in the face of a diffuse shareholder base precedes any active attempt by the UK to encourage an active market in equity claims. Indeed the current limited liability [corporate form] only emerged quite late in our history, after gaining a somewhat disreputable reputation in the industrial revolution. Limited liability implies that the rights of a corporation must always be more than the sum of its individual shareholders’ rights. So we might ask who is to be the beneficiary of these additional rights?