Is Section 172 of the Companies Act 2006 Capable of Delivering for All Stakeholders?

15 Pages Posted: 1 Sep 2012

See all articles by Amita Chohan

Amita Chohan

Warwick Law School & Warwick Business School

Date Written: August 31, 2012

Abstract

S.172 carries a “duty to promote the success of the company” and is divided into three subsections. A list of various stakeholder groups is to be found in s.172(1)(a)-(f).

This paper forms an answer, from an academic perspective, to the wider speculation that exists as to whether s.172 of the Companies Act 2006 is capable of delivering for all stakeholder groups. A discussion of the implications inherent in s.172 of the Companies Act 2006 is carried out, which seeks to critically analyse the structure, language and enforcement mechanisms of s.172 in order to investigate its true capabilities.

The key word in the title of this paper is “capable” which the reader should keep in mind. Is s.172 capable of delivering for all stakeholders? If so: is s.172 no more than merely “capable” of delivering for all stakeholders? Is s.172 both capable and successfully able to deliver for all stakeholders? Such sub-questions are targeted throughout this paper.

Evidence from pre-2006 case law, academic opinions, empirical studies and policy arguments are drawn upon to ensure that the conclusions arrived at in this paper are well-informed.

Keywords: s.172, s.172(1), Companies Act 2006, CA 2006, Stakeholders, Shareholders, Directors, Duties, Directors Duties, ESV, Enlightened Shareholder Value

Suggested Citation

Chohan, Amita, Is Section 172 of the Companies Act 2006 Capable of Delivering for All Stakeholders? (August 31, 2012). Available at SSRN: https://ssrn.com/abstract=2139528 or http://dx.doi.org/10.2139/ssrn.2139528

Amita Chohan (Contact Author)

Warwick Law School & Warwick Business School ( email )

Gibbet Hill Rd.
Coventry, West Midlands CV4 8UW
United Kingdom

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