UK Company Law Essay Example | Topics and Well Written Essays - 2500 words

UK Company Law - Essay ExampleHowever, the section 172 of CA 2006 is itself a variety which includes an explicit duty to promote the growth of the company successfully. Further, it also contains a new notion of broad-minded or enlightened sh areholder value. Whether a director of a company can be held accountable for any fiscal losses to the company due to their wrong decisions by the stockholders of the company? low the UK Companies Act, shareholders including minority and institutional shareholders can now initiate legal action against erring directors or directors to whom tendinous pay packages are being offered without relevance to their performance through derivative actions or through unjust prejudice clause. As the Institutional shareholders and the public grow angrier and angrier over the almost unimaginable riches that FTSE bosses are ranking in, the sudden spurt in shareholders activism in UK in recent days is being felt up like the shareholder spring had finally spru ng. ... Institutional Investors and Minority Shareholders Activism in UK-An psychoanalysis to a lower place section 173 & 174 of the Companies Act 2006, though the directors of a company are appointed and ousted by shareholders, barely the directors do not have any duty of care to any individual shareholder. It is to be spy that the duty of care by the directors is to the whole of the companys stakeholders and is not applicable to a shareholder only to the magnitude of their investment held in the company, and thus the directors duty of care is hold to the capital and not to any individual per se. Further, earlier, the shareholders are having every right to pass resolutions at a general meeting to restraint directors of a company but such resolutions are not bandaging on company directors, and it is advisory in nature only. For company directors, maximising the wealth of the shareholders is not a legal mandate but only an idealised norm of conduct. The directors are not expect ed to arrange only to the shareholders but also accountable for other stakeholders of the company like creditors, customers, employees, local community and suppliers. (Haynes, Murray & Dillard 57). Under UK corporate law, there exist no explicit defence or business judgment approach pattern as a safe harbour provision for commercial decisions taken by the directors of a company. However, the absence of any explicit provision in this regard does not leave the corporate directors in UK in the lurch. Thus, as per Justice Austin, in the absence of any explicit provisions under the UK Companies Act as regards to the business judgement rule, but the shareholders may avail safe harbour provisions through the ratification of directors decisions by the