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Watson, Susan --- "Derivation of Powers of Boards of Directors in UK Companies" [2012] ELECD 385; in Vasudev, M. P.; Watson, Susan (eds), "Corporate Governance after the Financial Crisis" (Edward Elgar Publishing, 2012)

Book Title: Corporate Governance after the Financial Crisis

Editor(s): Vasudev, M. P.; Watson, Susan

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9780857931528

Section: Chapter 3

Section Title: Derivation of Powers of Boards of Directors in UK Companies

Author(s): Watson, Susan

Number of pages: 21

Extract:

3. Derivation of powers of boards of
directors in UK companies
Susan Watson

STATUTORY SOURCE OF POWERS OF BOARDS

One of the major characteristics of the corporate form is and always
has been the separation of ownership (in shareholders) from control (in
boards of directors) (Berle and Means 1932). As Stephen Bainbridge says,
`Corporation statutes effectively separate ownership from control. Indeed
this de jure separation of ownership and control is one of the chief features
distinguishing the corporation from other forms of business organization'
(Bainbridge 2009).
The default position in most jurisdictions is that the statute gives powers
to the board of directors. In the US (with the exception of Missouri),
boards derive their authority from the statute. The Model Business
Corporation Act states that `[a]ll corporate powers shall be exercised by
or under the authority of the board of directors of the corporation, and
the business and affairs of the corporation shall be managed by or under
the direction, and subject to the oversight, of its board of directors.'1 The
Delaware General Corporation Law states that the `business and affairs of
every corporation organized under this chapter shall be managed by or
under the direction of the board of directors . . .' (§ 141). Section 128(1)
and (2) of the Companies Act 1993 (NZ) gives the function of the man-
agement, or direction or supervision, of the business and affairs of the
company to the board of directors, as well as all the powers necessary to
perform this function. ...