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Parry, Rebecca --- "Directors’ Duties within the United Kingdom" [2005] ELECD 198; in Tully, Stephen (ed), "Research Handbook on Corporate Legal Responsibility" (Edward Elgar Publishing, 2005)

Book Title: Research Handbook on Corporate Legal Responsibility

Editor(s): Tully, Stephen

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781843768203

Section: Chapter 4

Section Title: Directors’ Duties within the United Kingdom

Author(s): Parry, Rebecca

Number of pages: 15

Extract:

4 Directors' duties within the United Kingdom
Rebecca Parry



Introduction
This chapter considers the English law on directors' duties. This is an area of
law that has traditionally been regulated according to principles established by
judicial decision, strengthened in some cases by means of statutory provisions.
A complex body of such case law has been established. However in July 2002,
after an extensive Company Law Review process, the government announced
an intention to codify the law in this area, in the interests of clarity and acces-
sibility (Modernising Company Law: 26ff.). The draft Companies Bill
(Modernising Company Law: 343ff.; Draft Companies Bill, s. 17 and Sch. 2,
para. 2.) indicates that this codification, although replacing the common law,
will not substantially alter the case-law principles. It should be added these
laws should not be viewed in isolation ­ they are supplemented to a significant
extent by non-legal codes of conduct, in particular regarding listed companies.
We shall begin with an examination of theoretical considerations, before
examining the historical evolution of the law in this area. Finally the prospects
for future reform in this area will be summarized.

Theoretical considerations
The main theoretical controversy in the context of directors' duties centres
around the appropriate objective of the company's activities. Some theorists
contend that the directors should manage the company in the interests of its
shareholders: this may be termed `the shareholder argument'. Others contend
that the directors should take the interests of stakeholders, such as employees
and customers of ...