One might ask in passing whether private ownership has lived up to its promise. Beyond this simple dynamic, there ought to be much clearer recognition of the worth of informed and effective owners. Shareholder involvement is possibly the most important single element in informing the scope of a non-executive director s responsibilities and authority. It has always been clear in theory that a director is elected by and is responsible to the shareholders, but the identity of the owners has been diffuse and the accountability unasserted. The ultimate objective of effective shareholder involvement is to provide definition and backing for the directors.
Nobody wants shareholders to be determining the color of the paint on the walls in the rest rooms.
Discipline and restraint must define the scope of the ownership agenda. The Companies Acts spell out specific areas where shareholders must be involved. Ultimately, owners must determine in the case of unacceptable performance to change the board of directors. This is what has recently happened in the case of British Brazilian Smaller Companies Investment Trust. We are not trying to run their companies for them, but we are trying to suggest strategies that give us more confidence.