Lecture notes
lecture notes
- Module
- Law
- Institution
- University Of Law (ULaw)
detailed answer to the question
[Show more]
Seller
Follow
Content preview
s.172(1) of the Companies Act 2006 requires that, in carrying out their duty to promote thesuccess of the company, directors must have regard to the interests of a wide variety of
stakeholders [1] (sometimes referred to as “constituencies”) listed in s.172(1)(a) – (f).
Locate and read s.172(1). Make a list of all the stakeholders whose interests the directors
must have regard to and submit below. For each of these stakeholders, consider the ways
in which they may have an interest in the company.
[1] a stakeholder is simply a person with an interest or concern in something, especially a
business. Think about who connects with the company and who is affected by its success or
failure.
Members
Clearly, the members, as owners, have a stake in the success of the company, which
provides them with income in the form of dividends and capital growth in the form of
appreciation in the value of their shares – and if the company becomes insolvent, they are
very unlikely to get their money back. Therefore, they have interests in both the short term
and the long-term success of the company. Investors are now increasingly concerned about
the long-term sustainability of companies is which they have invested, and the
environmental, social and ethical impacts of the decisions made by investors. They also have
rights in relation to the governance of the company. CA s.172 mainly safeguards the primacy
of the shareholders, subject to an extent to the interests of other stakeholders.
Employees
The company provides them with jobs and income. Most employees will be provided with a
pension by their employer. They may also have other benefits such as health insurance or a
company car. Some companies provide share option schemes. The employees have certain
employment rights, e.g. not to be wrongfully or unfairly dismissed, discriminated against
etc. Even if a company is sold, the employees’ rights and employer’s obligations transfer
under the Transfer of Undertakings (Protection of Employment) Regulations 2006. Clearly,
once a company is insolvent, the employees lose all of these rights and benefits. From the
point of view of the company, having regard to the interests of the employees helps to
promote the success of the company, ensuring the retention of high quality staff and
avoiding the difficulties of a disgruntled and demoralised workforce or high staff turnover.
Suppliers
All suppliers want customers and an economically successful and sustainable company will
be a valued customer, providing income for the supplier. Continuing custom will provide
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller LegallyBrunette20. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £12.96. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
73918 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy revision notes and other study material for 14 years now