Abstract

This paper makes an analysis of the recent collapse of Fortis, a major European bank, from the perspective of shareholder activism and social movement theory to illustrate the limits of corporate governance. Some specific issues of the Fortis affair – and more especially the chaotic events at the general assembly - illustrate the application of social movement theory to shareholder activism, besides agency theory problems and conflicts of interests. Paradoxes between legal constraints and principles of good corporate governance are presented. The Fortis case illustrates the limits of the juridical bureaucracy in situations of urgency. The case illustrates the limits of corporate governance. Governance systems need to find appropriate mechanisms to align the voting rights with the long-term interests of the company. We argue for new criteria that will restrict representation to loyal shareholders with a long-term commitment. Good governance mechanisms should prevent opportunistic behaviour and encourage a responsible attitude.