Passive UK investors empower directors, risking shareholder expropriation.
The ownership of UK companies is spread out among many shareholders, but some founders or their heirs hold a significant portion. Institutional investors, who own a lot of shares, often don't use their voting power. Directors, who also own shares, can use their voting power to protect their positions. Share stakes are traded in a concentrated market. British corporate governance practices give directors a lot of power. This can lead to conflicts between shareholders and management.