Distinguished Visitor Lecture: Reconceptualizing Stockholder “Disinterestedness”: Transformative Institutional Investor Changes and Motivational Misalignments In Voting

Professor Henry T. C. Hu from the University of Texas School of Law delivered a Distinguished Visitor Lecture at the Faculty of Law, National University of Singapore, hosted by the EW Barker Centre for Law & Business. Moderated by Professor Hans Tjio, Director of the Centre, the July 30, 2025 lecture explored how transformative institutional investor changes present increasing challenges to core corporate governance principles and practices. Mr. Koh Boon Hwee, the Chairman of the Singapore Exchange Group, was the guest of honor and delivered the introductory speech.

Professor Hu began by discussing the foundational premise of the stockholder franchise: that “coupling” the economic interest in shares with the voting rights of these shares will generally motivate stockholders to exercise the vote to promote share value. Transformative institutional investor changes are increasingly severing that link. This “decoupling” could motivate such investors to vote in ways departing from—sometimes, the precise opposite of—the interests of  plain vanilla shareholders. He showed how hedge funds have sometimes intentionally deployed “decoupling” as a matter of strategy, using the Perry-Mylan Labs/King Pharmaceuticals situation to illustrate.

Looking beyond hedge funds, he pointed out that decoupling-related motivational misalignments now also occur with surprising frequency at mainstream institutional investors. These stem not as a matter of strategy but instead as byproducts of broader developments, including changes in financial stakes (such as the rise of indexing and increasing asset manager size) and changes in voting policies and practices.

He criticized the core legal response to departures from the foundational premise: the longstanding “disinterested stockholder” doctrine. The doctrine has remained frozen, reflecting assumptions at odds with new market realities. While the landmark March 2025 Delaware Senate Bill 21 amendments established, for the first time, a statutory definition of “disinterested stockholder,” they made no effort to modernize the judicial construct or establish a procedural architecture for determining disinterestedness. He showed how the existing doctrine can too often silence or distort the voices of institutional investor shares being voted precisely as contemplated by the foundational premise.

He outlined the reconceptualization of stockholder disinterestedness proposed in his co-authored Spring 2025 Business Lawyer article, http://ssrn.com/abstract=4803339. He illustrated how the reconceptualization could help ensure such votes are properly heard and, unlike the existing doctrine, recognizes the private ordering that can mitigate certain misalignments.

The lecture ended with a lively and thought-provoking Q&A session, where participants explored the broader implications of his ideas for corporate law and investor accountability.

(From left) Mr Koh Boon Hwee (Singapore Exchange Group), Professor Henry T. C. Hu (University of Texas at Austin – School of Law) and Professor Tjio Hans (NUS Law)

Professor Tjio Hans giving the welcome address

Mr Koh Boon Hwee delivering his speech

Professor Henry T. C. Hu presenting an engaging lecture

Professor Tjio Hans moderating a lively and thought-provoking Q&A session