Social Sciences
5 years ago

Directors must prioritize corporation over shareholders, changing corporate governance landscape.

SSRN Electronic Journal
Directors' Duty to Act in the Best Interests of the Corporation: 'Hard Cases Make Bad Law'
Jéan Du Plessis

Paper Summary

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Directors have a legal duty to act in the best interests of the company they work for. This duty is both in the law and common practice. However, there is debate on whether this duty conflicts with prioritizing shareholder interests. Court cases in the UK and Australia have added to the complexity. The key argument is that directors must focus on the company as a separate entity, not just on shareholders. This means considering other parties' interests too. Ultimately, directors must balance shareholder interests with what is best for the company as a whole.