Bringing such claims is complex and expensive, with the challenge of proving that a fall in share price is directly linked to a false statement. However, the FSMA provision allows shareholders to pursue not only the company but also the advisers involved.
Holding Feet To The Fire
Woodsford monitors corporate governance compliance and helps investors seek compensation and hold companies accountable. Engaging with the company through voting and investor calls is the first step, but litigation may be necessary if bad practices persist.
Investors must weigh the risks of public action against the potential for further share price decline. However, shareholder groups prioritizing ESG may pursue claims to generate negative attention and hold companies accountable.
“Companies forced to examine a catastrophic problem through litigation ultimately do better in the long run,” Friel said. “Institutional investors should exert their ownership rights and identify that something needs to be done.”
