Abstract: The Corporate Objective, by ANDREW KEAY, United Kingdom, Edward Elgar, 2011, x + 346 pp, Hardback, 89.95 [pounds sterling], ISBN 978-1-84844-771-4 AND The Enlightened Shareholder Value Principle and Corporate Governance, by ANDREW KEAY, United Kingdom, Routledge, 2012, viii + 303 pp, Hardback, 85.00 [pounds sterling], ISBN 978-0-415-68434-7 The days when corporate law scholarship was primarily characterised in the common perception by detailed doctrinal analysis of case law, the statutory regime and, where appropriate, of the complex interplay between them, if they ever truly existed (for the nature of corporate personality, at least, has consistently exercised the legal mind), have now long been consigned to history. This is not to suggest that such study is not of immense and continuing value but to acknowledge that corporate law is now very much concerned with theory and that this focus has in turn widened the nature of the subject so that the frame of legal debate may now be seen as incorporating scholarship from many disciplines. In particular, both economics and business ethics have provided the intellectual materials to enable legal scholars to craft corporate law theory whether of a contractarian or a stakeholder (or communitarian) variety. Furthermore, against the background of the fall of the Berlin Wall, decline of direct state involvement in industry and wider processes of globalisation such theory fell on fecund policy ground as states sought to develop comparative advantage for businesses incorporated in their jurisdiction. In this context, the Company Law Review, instituted by the then Labour Government in 1998 in order to provide a thoroughgoing examination of the legal framework of corporate law in the United Kingdom, placed the theoretical understanding of the corporate purpose at the centre of its extensive deliberations. In essence, the argument was between the models offered by shareholder primacy and pluralism. In the former the directors were required to give priority to the interests of the shareholders when making business decisions, whereas in the latter the directors instead had to balance the interests of all relevant stakeholders (including e.g. employees, customers and even the community) in making such decisions. Despite the intellectual attraction of the pluralist approach the Company Law Review clearly rejected it on practical grounds (concerning both the nature of the duty and its enforcement) and recommended instead a variant of the traditional shareholder primacy model where the directors were nevertheless required to have regard to the impact of their decisions in the light of a non-exhaustive list of factors which went beyond simply the direct shareholder interest. This approach was termed the enlightened shareholder value model and was subsequently adopted, in the form of section 172, as one of the central provisions of the new codification of directors' duties in the Companies Act 2006. The precise meaning and effect of this section is, however, one of the most hotly debated areas of contemporary corporate law. It is in addressing key aspects of this central debate that Andrew Keay has emerged (his earlier academic roots being as an acknowledged specialist in insolvency law) as both a significant and a prolific commentator in the years following the enactment of the Companies Act 2006. The two books that form the subject matter of this brief review (both of which are derived in part from previous published works authored by Keay) provide a substantial contribution to the on-going contemporary academic and policy discussions that have arisen as a response to the fundamental question raised by the Company Law Review, namely, in whose interests should the company be run? The earlier work, The Corporate Objective, is in many ways the most ambitious as it seeks to develop an alternative model, the Entity Maximisation and Sustainability model, to the theoretical approach adopted by the Company Law Review which centred on the notions of shareholder primacy and pluralism (or stakeholding). …
Publication Year: 2013
Publication Date: 2013-01-01
Language: en
Type: article
Access and Citation
Cited By Count: 1
AI Researcher Chatbot
Get quick answers to your questions about the article from our AI researcher chatbot