The direction and control of corporations: law or strategy?

Abstract

Purpose

To review and analyse the legal implications of the CA 2006 in respect of directors’ duties and powers, and in particular sections 172(1) and 471.

Design/methodology/approach

The use of business management theories complements the primary use of the legal doctrinal approach as applied in this study.

Findings

Section 172(1)'s wordings generate ambivalent legal implications for directors’ general duties as codified. It appears to give discretionary powers to directors where the review of the six statutory factors is concerned. However, directors will need to treat these seriously when read in conjunction with section 471. The latter pertains to directors’ disclosure obligations for the newly expanded business review section of the directors’ annual report. Available corporate evidence suggests that some corporate directors go beyond the minimum mandatory standards for environmental and social (Corporate Social responsibility, CSR) issues. They have benefited from the integration of their CSR policies and practices with their corporate strategic plans and actions. Some have even forged effective partnership with non‐governmental organisations (NGOs) and other stakeholders to co‐create businesses.

Practical implications

This investigation provides strategic insights and practical thinking to investors, corporate directors, state planners, NGOs, and other corporate stakeholders.

Originality/value

Previous legal analysis on general directors’ duties focused on the law. This study advanced corporate legal theory further with the use of insights from contemporary business theories and practices.

Citation

Yeoh, P. (2007), "The direction and control of corporations: law or strategy?", Managerial Law, Vol. 49 No. 1/2, pp. 37-47. https://doi.org/10.1108/03090550710759667