CS takeover by UBS – Shareholder democracy – a word for history’s garbage heap – News


Recently, the well-known folk play was performed in Zurich’s Hallenstadion and Basel’s St. Jakobshalle: Small shareholders wash the caps of big capitalists. The performances give the impression that there is something like a shareholder democracy. Things really got down to business at the Credit Suisse and UBS General Meetings: management was handed hollow nuts, moral verses were sung, and symbolic ships were capsized in front of the hall.

This so-called shareholder democracy has a certain entertainment value. But the term itself is hollow and misleading. Democracy, according to the Swiss Historical Dictionary, is a “form of government in which (…) all citizens with full rights, not one individual or a small group of powerful people, hold state power”.

Before emergency law, everyone is equal

So far, so well known. And shareholder democracy? There, the maxim “one share, one vote” applies to most companies today; one share, one vote. But a small group is in charge: the big investors. Whoever deposits more commands. And has a direct line to the carpet floor of the company. Kept amused by management. Discreetly, excluding the general public.

The example of Credit Suisse shows where this can lead in the worst case. From today’s perspective, it is difficult to understand how the CS management managed to hold off large investors for so long and keep finding new sources of money for the next capital increase. At least here there seems to have been a certain amount of expertise in the CS boardroom, one has to cynically state.

When it came to rescuing CS, the large investors were for once in the same boat as the small shareholders when the decision was made to incorporate CS into UBS using emergency law. Neither small nor large could have a say, things had to be done quickly. Small shareholders and large investors in the same boat for once; compensatory justice then? That falls short. And given the damage done and the many victims, that would be a disrespectful attitude.

Reconciliation of interests comes to nothing

General meetings would be the ideal stage for balancing the interests of small and large in a company’s shareholder base. But there is little sign of this – even after the implementation of the Minder initiative. The committed votes bounce off the stage and hardly find an echo in the voting results.

With their means, small shareholders are only small customers for a bank. But if their trust is gone due to various management errors, what happened with CS can happen. The most recent banking scandal in Switzerland would offer the best opportunity to discuss how the general assembly can really become a place for balancing the interests of large investors, small investors and management. For example, by allowing the small shareholders as a group to have a direct exchange with the management not only once a year at the AGM. Perhaps the term “shareholder democracy” can be retrieved from the rubbish heap of history.

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