Shareholder Primacy, Labour and the Historic Ambivalence of UK Company Law

Abstract

Most directors and senior managers of UK companies would likely regard it as trite law that, in undertaking their managerial and/or control functions, they are accountable first and foremost to their employer firm’s general body of shareholders. It follows that the interests of other corporate constituencies – and, in particular, those of employees – must ultimately cede to those of shareholders in the event of conflict. Although frequently taken for granted today, the lexical priority that the British company law framework affords to the interests of shareholders over those of other corporate constituencies is remarkable, not least when viewed alongside the correspondingly disempowered corporate governance status of labour in the UK. However, whilst the centrality of shareholders’ interests to the doctrinal and normative fabric of contemporary UK company law is both manifest and incontrovertible, this has curiously not always been the case. In this paper I argue that, whilst UK company law might look substantively stable and well-settled on its surface today, on closer inspection this facade of apparent calm can be seen to mask a fairly recent history of doctrinal and ideological turbulence with regard to fundamental underlying concerns. There is thus cause to question whether the basic normative impetus of the UK’s company law framework is as complementary to its surrounding economic and socio-political context as might first appear.