Shareholder/stakeholder dichotomy and the directors’ duties

Abstract

The government of a number of countries are currently finding it difficult to provide the social needs of its citizens. Some people are therefore on the  look-out whether there is any institution or organisation that will help the government in providing some of these basic needs of the society. Big  commercial companies, in the present day world, appear better suited to assist in that direction based, amongst others, on their proper organisation,  wealth and resources at their disposal, as well as power and influence they wield and exercise. There, however, appears to be an impediment on the big  companies’ (which are widely perceived to be economic entities) chances of discharging these social or societal needs – the duties of the board of directors which both under the common law and by virtue of the corporate legislation of many countries, are framed in such a way to favour the board’s  concentration on the maximisation of the shareholders’ interests which therefore appears to hinder the board’s discharging of the company’s wider  responsibilities. Currently, however, there is ongoing heated debate or argument for a shift from this orthodox shareholder primacy approach to a wider  or broader stakeholder approach. Adopting a doctrinal research methodology, this work considered some of the arguments in support of the  shareholder primacy and those in support of a shift from the status quo and concluded that there is a need to lessen the board’s over-concentration on  the interests of the shareholders with due attention paid to the non-shareholding stakeholders’ interests.