- Shareholder activist hedge funds have over $90 billion globally – funds that need to be “put to work”
- There are more legal tools available to activists in Australia than any other sophisticated global jurisdiction
In July, the NSW Supreme Court will hold its Annual Corporate Law Conference, chaired and coordinated by the Hon Dr Bob Austin. The focus is on shareholder protection. However, one of the topics will explore whether – on account of the global growth of well-funded, sophisticated activist hedge funds – Australian boards of directors need protection from their shareholders.
The shareholder activist “playbook” frequently involves direct challenges to the position of directors and senior management of a company. In many cases it involves threats of removal from office. In others it involves operational “directives”. These are not limited to under-performing companies. In most cases, the actions are linked to a refusal by the board or management to follow a strategy or structural change advocated by the activist. Almost always, the activist’s proposal is inspired by short-term benefits for current shareholders (with longer-term consequences for the corporation).