Corporate Governance with Shareholder Primacy: Right for Life in the Russian Realities

The paper considers and examines the model of corporate governance with shareholder primacy. The aim of the paper is to study the concept of management by the company with shareholder primacy and analyze from this point of view the possibility to use it Russia's corporate environment. The model of shareholder primacy aims to prevent as to the management the breach of obligations, fairness and loyalty (infringement of the fiduciary duties) and damage to economic interests of shareholders and the company. The considered model of management gives to shareholders a possibility to influence upon company management. A feature of the model of corporate governance with shareholder primacy is availability of agency relations between the principal, who is the shareholder, and its agent, management. The paper considers some features of relations between shareholders. The model of corporate governance with shareholder primacy allows not only to impose fiduciary duties on management, but to watch that the latter follows the basic criterion - to the best interests of the corporation. Corporate management being the agent of shareholders - is obliged to maximize return of investments of shareholders including in long-term prospect. Increasingly, the company management does not act fair, violating fiduciary duties. Management aspires to receive personal benefit using various mechanisms. The shareholder can use certain mechanisms of the control of actions of managers for the purpose of firm value maximization and carrying out a corporate policy in the interests of shareholders. However, shareholders should consider that to achieve the tasks, it is necessary to incite management. The presented work is interdisciplinary as is connected not only with corporate law, but with corporate governance which is a component of a science of the corporate finance. At last, the presented model of corporate governance with shareholder primacy allows its participants (shareholders, management) to determine the form to co-operate (to resolve conflicts of interests), to achieve firm value maximization in the long-term prospect.