Shareholder Primacy Revisited: Does the Public Interest Have Any Role in Statutory Duties?

Company and Securities Law Journal, Vol. 26, p. 355, 2008

23 Pages Posted: 28 Oct 2008 Last revised: 11 Oct 2009

See all articles by Jason Harris

Jason Harris

The University of Sydney Law School

Anil Hargovan

University of New South Wales

Janet Austin

University of New Brunswick - Faculty of Law

Abstract

The conventional view of corporate regulation is that corporations are to be managed for the benefit of their shareholders. The general law and statutory duties of directors and officers reflect this "shareholder primacy norm," with duties formulated to prevent directors acting otherwise than in the interests of shareholders. However, the general law and statutory duties are not identical. The remedies and enforcement mechanisms differ considerably, which raises the question as to whether the public enforcement of statutory duties carries with it a public interest mandate that general law duties do not. This paper considers what role the public interest should have in enforcing statutory duties and whether such a role represents a challenge to the dominant shareholder primacy norm of corporate law. This issue is highly topical as recent decisions have suggested that the statutory duties of directors and officers are limited in their scope to protecting the interests of shareholders, even to the detriment of the public interest. We contest that viewpoint and argue that, at least in relation to statutory duties, directors and officers have obligations that extend beyond the narrow conception of the protection of shareholder wealth.

Keywords: Corporations Act, directors, duties, public interest, Maxwell, ASIC, shareholders, ratification, James Hardie

JEL Classification: K22, K42

Suggested Citation

Harris, Jason and Hargovan, Anil and Austin, Janet, Shareholder Primacy Revisited: Does the Public Interest Have Any Role in Statutory Duties?. Company and Securities Law Journal, Vol. 26, p. 355, 2008, Available at SSRN: https://ssrn.com/abstract=1288933

Jason Harris (Contact Author)

The University of Sydney Law School ( email )

New Law Building, F10
The University of Sydney
Sydney, NSW 2006
Australia

HOME PAGE: http://https://sydney.edu.au/law/about/people/profiles/jason.harris.php

Anil Hargovan

University of New South Wales ( email )

Kensington
High St
Sydney NSW 2052
Australia

Janet Austin

University of New Brunswick - Faculty of Law ( email )

P.O. Box 4400
Fredericton, New Brunswick E3B 5A3
Canada

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