A Critical Analysis of the UK Company Law Corporate Objective: Purposive, Practical and Possible: Longitudinal Corporate Objective to Remedy the Enlightened Shareholder Value Approach of the Companies Act 2006

Abstract

Establishing the core objective of corporate law has proved an unwieldy topic of debate in the United Kingdom’s legal system. This is due, in no small part that until the Companies Act 2006 there was no definitive statutory pronouncement on the objective of companies. In the context of a society still suffering from an unremitting economic crisis, this paper will ascertain why there ought to be a corporate objective, what that objective ought to be and it then shows how it can be applied in practice. This paper explores the two contemporary theories as to why there should be a corporate objective in the first place. However, this paper argues that both approaches ought to be rejected in favour of a corporate objective defined as ‘long-term firm value maximisation’. The approach is based on requiring companies, by and large controlled by directors and management, to not re-divert their thought-makeup away from shareholders or stakeholders to a different type of focus on attaining longitudinal benefit for the company and society in the long-term.