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Pages 10 (2510 words)
The major purposes underlying the UK's Review of Company Law is to protect shareholder rights, to ensure directors' responsibility, to promote corporate governance - all of which will, in the end, facilitate a better policy environment for commerce and trade.
This paper will provide a critical analysis as to whether the Companies Act 2006, specifically sections 171-188 thereof, has introduced significant changes in the law, or is merely a restatement of existing legal principles.
The provisions in question to be examined involve the duties of the director of a company. Indeed, in a company, virtually all policy-making is left in the hands of the Board of Directors or on the majority shareholders2. The definition of director given at section 741(1) of the Companies Act 1985 'includes any person occupying the position of director by whatever name called. This definition can also be found in the Insolvency Act 1986 section 251 and the Company Directors Disqualification Act 1986 section 22, where it is extended to include shadow directors. While allowing directors to control business strategies has merit - for instance, decision-making is streamlined and businesses largely depend on the need to be able to respond to issues not only with soundness but also with dispatch -- some problems inevitably arise.3
In theory, a director, holding as he does a position of trust, is a fiduciary of the corporationi. As such, in cases of conflict of his interest with those of the corporation, he cannot sacrifice the latter without incurring liability for his disloyal act. ...
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