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"Director's Duty to Promote the Success of the Company": Should Hong Kong Implement a Similar Provision?

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Abstract:

Section 172 of the UK Companies Act 2006 is arguably one of the most controversial provisions that has been introduced into the company law of the UK. It incorporates the concept of enlightened shareholder value, together with a list of non-exhaustive factors that directors ought to take into account in promoting the success of the company. The discussion focuses on a recent review undertaken by the Hong Kong Standing Committee on Company Law Reform (SCCLR) as to whether Hong Kong should follow the UK by incorporating a similar provision to section 172 of the Companies Act 2006 in its Companies Bill. Contrary to the SCCLR recommendation, the primary conclusion drawn is that it makes commercial sense for a similar provision to be introduced in Hong Kong. A careful examination of section 172 of the Companies Act 2006 shows that it simply reflects existing law and modern business practices. Therefore, the purpose of implementing such duty on directors does no more than reinstate the practical reality.

Document Type: Research Article

Publication date: April 1, 2010

More about this publication?
  • The Journal of Corporate Law Studies provides a forum for scholarship on corporate, securities and financial law broadly construed. Thus the Journal publishes articles on subjects as diverse as insolvency and the commercial conflict of laws, in addition to mainstream topics such as directors' duties and financial regulation. The Journal also embraces interdisciplinary work and work in cognate fields.Articles published in the Journal are subject to rigorous peer review. Shorter articles and notes are refereed where appropriate.
    The Journal is published twice a year in June and October.
    The journal will be of interest to academics and practitioners specialising in any of the subjects covered, and also to those with an interest in the strategic direction of the law and the influences which affect it - thus regulators, law and policy-makers, and the judiciary.
hart/jcls/2010/00000010/00000001/art00002
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