Notes and Changes

This lecture is also a webinar and will be available from 1pm on 20 February at: https://www.law.ox.ac.uk/clc/webinar

One of the highly contested issues today in corporate law and governance revolves around boardroom diversity, with an emphasis on gender diversity. In recent decades, unfortunately, despite the fact that women’s economic and political status have advanced significantly in the United States and around the world, women have yet to achieve parity with men on issues concerning representation and participation in the corporate world. This is evidenced by the stark lack of representation of female directors in the boardrooms of major public and private corporations. There are increasing calls for action from various groups, including academics and regulators. 

This talk, which is based on a working paper, will consider the relationship between the recent rise (over the last twenty years) of institutional investors, who own an increasing share of public equity markets on the one hand, and the need to elect women to the boardroom on the other. The main argument is that institutional investors have a fiduciary duty to advance the goals of their beneficiaries (the individuals who invest in these institutions). Managers of financial institutions are subject to various enhanced fiduciary obligations, which require them to take board diversity concerns into account, due to the fact that they are serving as stewards to their beneficiaries and the portfolio companies.

In light of the duties of the board of directors, the current regulatory framework, (and shifts in institutional investors market and legal powers), institutional investors have a duty to take into account the question of women representation in the boardroom in the corporations in which they invest. They also need to consider generally the ways in which they vote on appointment of directors to the board. There are several ramifications for breaching a fiduciary duty, such as litigation involving derivative actions, claims for breach of fiduciary duty, or proxy violations on behalf of individual (and/or institutional investors). These claims in the USA, for example, can be brought in state or federal courts (depending on the nature of the claim).