On the Enersis Case

A Balance of Loyalties

Abstract

The role of the board of directors in the capital increase at Enersis proposed by the company's controlling shareholder offers a clear illustration of two variants of the well-known “principal-agent problem.” Let us recall the case. As regards corporate governance, the discussion turned on how independent from the controlling shareholder the directors legally defined as such actually were in practice. This is because, in fact, with one exception out of seven, they had been elected with the controlling shareholder's votes. Continue reading...