The Legislative Response to the Shareholders V Stakeholders Debate: A Comparative Overview

Abstract

The debate as to whose interests should be considered by directors in terms of their duty to act in the best interests of the corporation—shareholders or stakeholders—has been popular among corporate law scholars for a number of years. In some jurisdictions the judiciary indicated a willingness to depart from a strict shareholder-centric approach by recognising that the interests of creditors become paramount under certain circumstances. Until relatively recently the legislature remained silent on this topic. However, corporate law reform afforded the legislature an opportunity to revisit this debate in at least four common law jurisdictions—Australia, the UK, South Africa and Singapore. This article provides a comparative overview and analysis of relevant legislation in these jurisdictions to illustrate the extent to which, if at all, the legislatures in these jurisdictions have been persuaded to depart from the notion of shareholder supremacy and ultimately assesses the implications of a particular approach adopted by the respective legislatures.