Codified Directors’ Duty to Balance Interests: The Beginning of the Future for Corporate Law?

Abstract

The question underpinning whether directors can legitimately consider and balance other constituents’ interests in their business judgments remains open-ended. This article reviews the state of modern company law and finds that the dominance or global convergence on the maximisation of shareholder wealth claim is not only exaggerated but has become untenable in light of: (i) unmissable stakeholder-oriented company law reforms across jurisdictions; (ii) widespread endorsement of directors’ duty to balance all stakeholder interests in their own rights within business communities and among leading academic experts. The article predicts the future for corporate law clearly codifying directors’ duty to balance all interests. It not only proposes a workable framework enabling effective discharge of this duty within the ambits of the good faith doctrine and business judgment rule but also affords non-shareholder stakeholders a justiciable right to challenge uninformed, interested or mala fide business decisions.

Keywords: Balancing Interests, Directors’ Duty of Good Faith, Future for Corporate Law, Stakeholder Theories