what is shareholders' democracy? Or Corporate Governace democracy?

Answer:

On shareholder democracy
The idea of shareholder democracy stems from the original concept of the joint-stock limited-liability company in the mid-nineteenth century. Ownership was the basis of power over the company, with the shareholder members nominating and appointing the directors, who were the stewards of their interests. Over the years the growing scale of companies and the diversity of shareholders, both in their location and interests, meant that power in many companies, particularly those listed on a stock exchange, shifted to the directors. Berle and Means showed this development in their classical 1930s study.

There have been some attempts in recent years to re-assert shareholder power. The development of audit committees, with independent (non-executive) directors, initiated in the United States and now called for in all corporate governance codes provided some protection for shareholder interests. There have also been calls for shareholders to re-exert control over their companies. The UK corporate governance code and those of some other countries, now call on investors, particularly institutional investors, to use their voting power to exert control over boards. But there are some significant drawbacks. Over the years, company law in the states of the US and elsewhere have shifted in favour of incumbent directors. For example, it is typically difficult for shareholders to nominate new directors for election and often exceedingly hard to get them elected.

There have been other attempts to exercise shareholder influence. Brazilian company law provides for companies to create a shareholder committee which can wield power over board decisions. Dr Shann Turnbull in Australia has promoted the idea of a corporate senate, elected by shareholders, to review board decisions. The supervisory board in the two-tier board governance structure, where it includes shareholder representatives, can also wield power over the executive board. Shareholder democracy, the right of the owners of a company to exercise power over their directors and their decisions, remains a matter of concern in many company law jurisdictions.

On corporate governance democracy
Corporate governance democracy is not a phrase frequently used in the corporate governance literature. It may mean shareholder democracy as discussed above. Or it may be used to cover the philosophical question of the rightful place of the corporate entity in society. Sometimes referred to as stakeholder theory, this issue questions the rights, responsibilities and duties of companies to all stakeholders who might be affected by their actions. The current interest in corporate social responsibility and sustainability reflects such interests.