Volume 2 issue 1 APRIL 2014
A Critique of Enlightened Shareholder Value:
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The statutory re-conceptualisation of the traditional common law shareholders’ primacy into ‘enlightened shareholders’ value’ emblematic of section 172 of the Companies Act 2006 has generated a universe of views amongst scholars. While some scholars hypothesise that the enlightened shareholder value concept epitomised by section 172 is no more than a re-affirmation of the traditional common law shareholder primacy under a different guise, others theorise that it inches towards a ‘pluralist theory’ of continental European tradition.
Still further, others argue that the re-conceptualisation is emblematic of the convergence of principles from both the traditional ‘primacy theory’ and ‘pluralist theory’. Against the background of this theoretical debate, constraints upon the operation of section 172 have made it difficult for the courts to enforce the section pragmatically. It is contended that despite the laudable statutory re-conceptualisation, section 172 only added little improvement (if any) on the traditional common law shareholder primacy; and its greatest shortcoming lies on the enforcement constraints. Nevertheless, the courts can still adopt a teleological interpretative approach that plugs the loophole in the stakeholders’ protection. |