Corporate Management- Directors' Duties
“Most Companies Acts of the region contain a provision requiring directors have to regard to the “interests of company employees in general”. Seemingly introducing a new stakeholder philosophy into company law, the precise import and significance of such a requirement remains a mystery.”
Discuss.
Introduction
Company directors are like the shepherds who always try to convince the sheep that their interests and his are one and the same. Alolf Berle and Gardiner Means in Modern Corporation and Private Property cast an aura of suspicion over managerialism in companies characterized by a separation of ownership and control. They contended that in modern corporations, managers decide how a corporation’s capital is spent, how resources are allocated and what endeavours are undertaken by the company but do not themselves own the capital or resources. Experts in corporate and securities law, management consulting and academia have wrestled with reconciling the divergent interests of those who own corporations and those who control them. The corporate scandals - ENRON (2001), WORLDCOM (2002), Vivendi (2002) and Tyco (2002) - have shown that there are unresolved tensions. Whilst at the banquet of statutory protection, shareholders and creditors feast on regulation protecting their interests in the company, be it solvent or insolvent. Labour is noticeably absent. Whilst the commercial realities indicate that maintaining good relations with creditors, suppliers, customers and workers are all important parts of maximizing profitability, directors do not owe a fiduciary duty to these corporate constituencies. The novel stakeholder ideology challenges the stockholder dogma which pervades corporate management structures, finding expression in regional company laws. This paper analyses the statutory duty of corporate directors, the intricacies of the relationship between the company and the employees thereof, and whether in light of the apparent deficient companies’
Discuss.
Introduction
Company directors are like the shepherds who always try to convince the sheep that their interests and his are one and the same. Alolf Berle and Gardiner Means in Modern Corporation and Private Property cast an aura of suspicion over managerialism in companies characterized by a separation of ownership and control. They contended that in modern corporations, managers decide how a corporation’s capital is spent, how resources are allocated and what endeavours are undertaken by the company but do not themselves own the capital or resources. Experts in corporate and securities law, management consulting and academia have wrestled with reconciling the divergent interests of those who own corporations and those who control them. The corporate scandals - ENRON (2001), WORLDCOM (2002), Vivendi (2002) and Tyco (2002) - have shown that there are unresolved tensions. Whilst at the banquet of statutory protection, shareholders and creditors feast on regulation protecting their interests in the company, be it solvent or insolvent. Labour is noticeably absent. Whilst the commercial realities indicate that maintaining good relations with creditors, suppliers, customers and workers are all important parts of maximizing profitability, directors do not owe a fiduciary duty to these corporate constituencies. The novel stakeholder ideology challenges the stockholder dogma which pervades corporate management structures, finding expression in regional company laws. This paper analyses the statutory duty of corporate directors, the intricacies of the relationship between the company and the employees thereof, and whether in light of the apparent deficient companies’