|
|
|
|
|
|
by Retric
854 days ago
|
|
|
Firstly, financial benefits are only one aspect of possible benefits to stockholders. A company may consider reducing pollution a direct benefit to its owners as that improves their health. There’s quite a lot of freedom for things as cancer research for example benefits people beyond the financial incentives. Anyway, the next sections makes it explicit that shareholder primacy isn’t required: 2)Where or to the extent that the purposes of the company consist of or include purposes other than the benefit of its members, subsection (1) has effect as if the reference to promoting the success of the company for the benefit of its members were to achieving those purposes. (3)The duty imposed by this section has effect subject to any enactment or rule of law requiring directors, in certain circumstances, to consider or act in the interests of creditors of the company. Shareholder primacy instead stems from shareholders being able to fire management. |
|
|
But what I would say is, in relation to (2) that you highlight, that "purposes of a company" means that defined in its Articles of Association as created when it the company was formed (and as later amended if that is the case).
So I would argue (2) doesn't apply to the majority of companies, many of whom are likely operating off template Articles without expanded purpose definitions.
In relation to (3), interests of creditors, this was brought before the Supreme Court in recent history[1]. My reading of the summary of the judgement would suggest there is a relatively narrow window for being mandated vs "have regard", in particular:
"All members of the Court agree that AWA’s directors were not at the relevant time under a duty to consider, or to act in accordance with, the interests of creditors"
[1] https://www.supremecourt.uk/press-summary/uksc-2019-0046.htm...