Operationalising a Stakeholder Conception in Company Law

Publication details

Chiu, H; (2017) Operationalising a Stakeholder Conception in Company Law. Law and Financial Markets Review , 10 (4) 10.1080/17521440.2017.1309161. 

Abstract

UK company law, in its arguably insular shareholder-focused framework, has been called into question regarding its fitness for purpose (see 'Corporate Governance inquiry launched', 30 September 2016) in the continuing litany of corporate malpractices and scandals2 since the 1992 resolve to reform corporate governance. The excessive focus on shareholder interests, rights and powers in UK company law is starting to reveal failures that not only jeopardise companies’ viability but also give rise to adverse social impact. We argue that the shareholder primacy-led foundations for UK company law should be revisited, and that the adoption of a stakeholder conception in company law can be both normatively and positively supported.

We argue that the shareholder primacy-led foundations for UK company law should be revisited, and that the adoption of a stakeholder conception in company law can be both normatively and positively supported.

We suggest the contours of legal reform in company law: to introduce stakeholder covenants with the company, and recalibrate shareholder powers and enforcement. We believe that these key aspects of reform are possible and important to usher in a new framework for company law that will address the efficiency and social legitimacy needs of the company.

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