THE ROLE OF INSTITUTIONAL INVESTORS IN SHAPING CORPORATE GOVERNANCE: STEWARDSHIP CODES AND THEIR ENFORCEABILITY

Major investors like pension funds, mutual funds, and insurance companies now own most of the shares in big companies. To get these investors to keep a close eye on how companies are run, something called stewardship codes was created. The problem is, these codes are not really enforceable. This article looks at how different countries - like the UK, Japan, the EU, India, and the US - regulate stewardship. It checks if simply asking companies to "comply or explain" or "apply and explain" is enough to hold them accountable, even if there are no legal consequences. The article says that just having voluntary or mandatory rules is not enough. Instead, it suggests a mixed approach. This would mean that companies have to follow basic rules that can be checked by independent auditors, especially when it comes to conflicts of interest and how they vote on important issues. At the same time, companies would still have some freedom to decide how they want to handle other aspects of stewardship.