Negotiating the Minefields of Corporate Vote‐Buying

Luh Luh Lan and Loizos Heracleous

Corporate Governance: An International Review, 2007, vol. 15, issue 5, 969-978

Abstract: Corporate vote‐buying has received significant attention in the last decade, in several legal cases that illustrate the fine line between legitimate use of vote harnessing as a useful corporate strategic tool on one hand, and its negative connotations as a potential instrument of fraud that attempts to disfranchise shareholders on the other hand. After a brief outline of the legal history of corporate vote‐buying and the rationale for the courts’ vigilance on this practice, in both the United States and the United Kingdom, we outline some strategic reasons for vote‐buying that might make it a useful option in certain circumstances. Lastly we discuss key principles that a board of directors should bear in mind when engaging in corporate vote‐buying, so that it can employ the practice productively and legitimately, keeping in mind shareholders’ best interests and avoiding potentially costly and destructive legal challenges.

Date: 2007
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https://doi.org/10.1111/j.1467-8683.2007.00616.x

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