Company Law Essay Example | Topics and Well Written Essays - 2000 words - 2

Company Law - Essay Example This manifest prominently amid the utilization of any assets, opportunity, or information and fails to link to a clash of interest flowing from a transaction or pact with the company or in the events in which the subject has been permitted by the company’s directors (Davies 2012, p.8). Highlighting conflict of interest impacting on the director demands exploring whether the director engaged will obtain a substantial gain from the manifest conflict of interest. Background The decision that the directors’ duties should be codified was accompanied by the debate centring on the â€Å"stakeholder question.† This relates to the question on whose interests that companies should be run (whether the interests of the shareholders, the community, or employees). This debate centred on two approaches: The first school of thought detailed pluralism, which details that the role of the company centres on serving the interests of the multiple interest groups of stakeholders. As s uch, the duties of directors should be broadened to ensure that the directors respond to a broad collection of stakeholders other than shareholders (Lowry 2012, p.2). The second school of thought inclines towards the enlightened model maintaining that the function of the company hinges on generating value for the gain of shareholders while, simultaneously, matching the laid long-term objectives of the company, and associations that the company enjoys with other stakeholders inclusive of suppliers, community, employees, and others (Lacy 2002, p.154). At the height of debate, the Company Law Review settled for the enlightened shareholder approach, which appreciates the premise that it is the interests of the shareholders that should be placed first (Lowry 2012, p.3). The enlightened shareholder approach also recognizes that the company’s possibility for success anchors in maximizing on the relationships that the company enjoys various stakeholders groups. Discussion The orienta tion of the directors’ obligations embodies one of the most critical features prominently highlighted by the Company Law. The statutory scheme recognizes the directors’ roles outlined in C.2, Part 10 of the Company Act 2006. The title of â€Å"director,† in this case, is broadened to embrace shadow directors. The directors are required to conduct their duties as per the provisions detailed in C. 2, Part 10 of the Company Act 2006 to the company, instead of doing so for the shareholders and other stakeholders within the company (Arden 2007, p.162). The roles handed to the directors encompass aspects such as an obligation to act as per the applicable provisions of his/her powers detailed by the company’s constitution; a role to promote the long-term achievement of the company as perceived to be in good faith; an obligation to employ reasonable care, meticulousness, and skill; an obligation to manifest independent judgment; an obligation to evade conflict of interest where it may arise; an obligation not to acknowledge gains flowing from incidences such as secret commissions and bribes; and, an obligation to clarify on the interests amid the transactions (Calder 2008, p.59). Directors’ Duty to Act as per their Powers A company embodies a person and as such, ought to proceed as per the