Shareholder activism has become an increasingly important touchpoint in the UK’s corporate landscape and globally. As institutional investors, hedge funds and retail investors seek to exert increasing influence over public and private companies, activism has evolved into a mainstream corporate governance tool.
Over the past few years, the UK has witnessed a surge in activist campaigns, reflecting global trends and a shift in investor expectations. All companies should be considering the impact of shareholder activism as, if neglected, it can be a block to the efficient running of company. It also highlights how shareholders (the owners) of companies can have a key role in shaping operational decision making.
Shareholder activism frequently operates as an important reminder to directors that the company’s shareholders are watching what they are doing and how they are doing it, emphasising the importance of promoting good corporate governance and regulatory compliance practices in all aspects of a business.
This article explores the growth of shareholder activism in the UK, the key drivers behind its rise and strategies for managing activist engagements effectively.
WHAT DOES ‘SHAREHOLDER ACTIVISM’ LOOK LIKE?
While it comes in many forms, shareholder activism in the UK will often look different depending on whether the company is public or private and the status of the company’s shares. Shareholder activism usually refers to actions taken or proposed by a shareholder(s) of a company in furtherance of a particular objective or course of action for the company.
This objective or course of action is usually at odds with the motives and strategy that the company and its directors is currently taking.
The shareholder activism can take several forms, for example the shareholders using their legal rights and public pressure to force the company’s hand into making a decision or taking a particular course of action.
Some examples will include:
CALLING GENERAL MEETINGS
One of the most common tools a shareholder has is the ability, pursuant and in accordance with the Companies Act 2006 (Companies Act), to force the company to call a general meeting to put matters to a vote of the shareholders. Most commonly, this might involve removing a director or to stop / reverse a strategic decision of the company. Calling a general meeting requires various prescribed notice periods and can incur costs for the company. If used improperly, continuous calling of general meetings could easily impact the business and smooth running of the company.
CHANGING THE BOARD
As set out above, the shareholders can use their voting power to affect the composition of the board to push for the removal of a director using their voting rights.
PUBLIC PRESSURE
Shareholders have a litany of tools available such as social media, press announcements via publishers and other media to ventilate issues and concerns they have publicly about the company and how it is being run.
CIRCULATING A STATEMENT TO SHAREHOLDERS
Shareholders might try to rally other shareholders to a cause via various informal channels but also via their statutory rights, including requesting the company circulate a statement to all shareholders.
COURT ORDERS
There are various provisions under the Companies Act available to shareholders who may wish to bring legal action to seek a court order against the company and its directors.
It is easy to see how shareholder activism can have measured effects on the operations of a company and cause disruptions. The types of actions set out above require administrative and financial resources of the company to resolve that would otherwise be used to run the company.
POWERS UNDER THE COMPANIES ACT 2006
The Companies Act 2006 provides statutory rights that shareholders can use to influence corporate governance and decision-making of a company. The key legal powers include:
(a)
(b)
Requisitioning General Meetings (Section 303-306)
Shareholders holding at least 5 % of a company’s voting rights can demand that the board convene a general meeting. This allows activists to propose resolutions, challenge board decisions, or seek the removal of directors. If the board does not call the meeting within 21 days of a valid demand, shareholders can do so themselves at the cost of the company.
Proposing Resolutions at AGMs (Section 338)
Investors with at least 5% of the total voting rights or 100 shareholders holding shares in the company on which there has been paid up an average sum, per member, of at least £100 can submit resolutions at a company’s Annual General Meeting (‘AGM’). This power is frequently used by activists to push for governance changes, such as executive pay reductions or climate-related commitments.
Removing Directors (Section 168-169)
A simple majority vote (more than 50% of the votes cast) can remove a director before their term ends, provided the general meeting is convened on special notice (namely, 28 days). Activists often use this mechanism to challenge underperforming leadership or install new board members aligned with their interests.
Access to Company Information (Section 116-117)
Shareholders holding 5% or more of voting rights can request to inspect the company’s register of members. This allows activists to identify other investors and coordinate efforts to challenge company policies or governance structures.
Blocking Special Resolutions (Section 283)
A special resolution (e.g., significant acquisitions, share buybacks, or changing company articles) requires shareholder approval of at least 75% of votes cast. This means a group of shareholders with more than 25% of voting rights can effectively block major strategic decisions, giving activists leverage in negotiations.
These legal provisions provide a strong foundation for shareholder activism in the UK, allowing investors to challenge company decisions, push for governance reforms and influence long-term corporate strategies.
THE GROWTH OF SHAREHOLDER ACTIVISM IN
THE
UK
Shareholder activism has been on the rise in recent years. High profile corporate disputes with shareholders have become common place in the UK corporate landscape, with FTSE 100 companies often operating airport style security frisks to enter their general meetings.
There have been various drivers for the increase of shareholder activism in the UK market ranging from social, environmental and political issues and these issues are tied to particular industries that companies operate in. Two of the main drivers are the increase of institutional investor influence and environmental, social and governance (ESG) focussed activism.
INCREASING INSTITUTIONAL INVESTOR INFLUENCE
Institutional investors, particularly asset managers and pension funds, have become more vocal in holding boards accountable and wanting to have their voice heard in relation to corporate governance and the strategic direction of the company. UK-based investors such as Legal & General Investment Management and Schroders have taken stronger stances on governance issues, pushing for reforms on executive pay, diversity and climate risk management.
RISE OF ESG-FOCUSED ACTIVISM
ESG concerns have become a major driver of shareholder activism. Activist investors, including non-governmental organisations and sustainability-focused funds, have increasingly targeted UK-listed companies to demand greater action on climate change, human rights and corporate ethics. Campaigns led by organisations such as ShareAction have pressured firms to align their strategies with net-zero commitments and social responsibility standards.
HIGH-PROFILE SHAREHOLDER ACTIVIST CAMPAIGNS
Several notable activist campaigns have made headlines in recent years, further legitimising shareholder activism as a powerful force in UK corporate governance. For example:
Elliot Management’s Activism at BP – BP’s chairman has recently informed their shareholders that he will be standing down amid pressure from the New York hedge fund and activist investor.
Saba Capital’s requisitions – The US activist investor recently requisitioned shareholder meetings at seven investment trusts in a push to take control of the board and impose their investment mandate.
Cevian Capital’s Stake in Aviva – The activist investor pushed for cost-cutting measures and a clearer capital return strategy. Cevian Capital have subsequently sold their entire stake in Aviva and during the period of Cevian’s stake, Aviva paid out more than £5bn to its shareholders.
Bluebell Capital’s Challenge to FTSE 100 Firms – Bluebell Capital has engaged with multiple UK-listed companies, including Unilever, to demand strategic changes.
These campaigns have demonstrated that both domestic and international activists are increasingly targeting UK firms, often with significant success.
KEY TAKEAWAYS
Shareholder activism in the UK has grown significantly over the past few years, driven by increased institutional investor involvement, a stronger focus on ESG issues and high-profile activist campaigns. As activism continues to shape the corporate landscape, UK private and publicly-listed companies must adopt proactive engagement strategies, strengthen governance practices and prepare effective response mechanisms to navigate activist challenges successfully.
By fostering constructive dialogue and demonstrating a commitment to long-term value creation, companies can manage activist pressures while maintaining stability and strategic focus.
HOW LAYTONS ETL CAN HELP
Navigating shareholder activism requires expert legal guidance to ensure compliance with regulatory requirements while effectively managing investor relations. Laytons ETL has extensive experience advising both private or public companies and shareholders on shareholder rights, corporate governance and dispute resolution.
Private and Public Companies:
Laytons ETL assists companies in preparing for and responding to activist shareholders, including:
Pre-emptive corporate governance reviews of good governance practices and procedures.
Strategic advice on shareholder rights and corporate governance.
Legal advice in relation shareholder disputes, requisitions of general meetings and other actions brought under the Companies Act.
Dispute resolution services for contested matters involving shareholder rights.
Shareholders:
For shareholders seeking to ensure they are heard and influence corporate decision-making, Laytons ETL provides:
Strategic advice on shareholder rights and corporate governance.
Drafting and advising on shareholder statements.
Legal support for shareholders requisitioning general meetings and other actions brought under the Companies Act.
Dispute resolution services for contested matters involving shareholder rights.
Whether advising companies or shareholders, we combine deep legal expertise with a pragmatic approach to help clients achieve their corporate objectives effectively. If you have any questions on the matters discussed in this article or if you need further guidance on topics discussed in this article, then please get in touch with us to discuss things further.
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+44 (0)20 7842 8000
www.laytons.com
KEY CONTACTS
Joan Yu
Partner & Head of Corporate
joan.yu@laytons.com
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Robert Paydon
Disputes Partner
robert.paydon@laytons.com
+44 (0)20 7842 8000
Cameron Sutton
Corporate Associate
cameron.sutton@laytons.com
+44 (0)20 7842 5425
george.roberts@laytons.com
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Disclaimer: This publication is provided by Laytons LLP for informational purposes only. The information contained in this publication should not be construed as legal advice. Any questions or further information regarding the matters discussed in this publication can be directed to your regular contact at Laytons LLP or Laytons’ Corporate team.
