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An analysis of enlightened shareholder value in light of ex post opportunism and incomplete law

journal contribution
posted on 2011-01-01, 00:00 authored by Andrew Keay, H Zhang
In the UK's Companies Act 2006 the traditional shareholder value principle was modified by the introduction of the principle of enlightened shareholder value, the primary source of which is section 172(1). Included in this provision is a requirement for directors to have regard for the interests of certain stakeholders when exercising their duty to promote the success of their company, and this article refers to this as the principle of due consideration. Based on the incomplete law framework, this article reveals that the principle of due consideration for stakeholders has the potential effect of checking ex post opportunism on behalf of shareholders and/or directors against non-shareholding stakeholders. As such, this principle could make a positive and value-adding contribution to all concerned simply because ex post opportunism of any kind is unfair and bad for business. Moreover, our analysis further suggests that if the potential effect of the principle of due consideration is to become real, a process of trial and error in the form of actual cases brought to, and tried in, the courts over time is required.

History

Journal

European company and financial law review

Volume

8

Issue

4

Pagination

445 - 475

Publisher

De Gruyter

Location

Berlin, Germany

ISSN

1613-2548

eISSN

1613-2556

Language

eng

Publication classification

C1.1 Refereed article in a scholarly journal; C Journal article

Copyright notice

2011, De Gruyter

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