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

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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 article 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.
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Author(s)
Harris, Jason
Hargovan, Anil
Austin, Janet Elizabeth
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Publication Year
2008
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Journal Article
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UNSW Faculty
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download Harris_Hargovan_Austin_CSLJ_revised submission.pdf 142.72 KB Adobe Portable Document Format
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