2.2 Cuerpo y animalidad
2.2.1 La animalidad en “Informe para una Academia”
Corporate governance in the UK also consists of rules derived from statutes: the CA 1985, the CA 1989 and CA 2006 regarding directors’ administrative duties such as
220 F Almajid, Conceptual Framework for Reforming the Corporate Governance of Saudi Publicly Held Companies: A Comparative and Analytical Study from a Legal Perspective (Chair For Islamic Financial Studies at Imam Muhammed Bin Saud Islamic University, 2012) Page: 135.
221 J Birds and others (eds), Boyle & Birds' Company Law (8th edn Jordans, Bristol 2011) Page: 595. 222 There are many key cases relating to corporate governance and some of them have mentioned
issues in regard to vote counting meetings being held. 223 Perhaps the UK government’s approach towards the corporate governance of listed companies can be described as a minimal standard approach. Accordingly, the Companies Acts and related legislative instruments may be described as being in alignment with the authorities' future view of the UK.224
In the context of statutes, there are other laws that need to be mentioned here, such as the Insolvency Act 1986, the Company Directors Disqualification Act of 1986 (“CDDA”) and the Financial Services and Market Act 2000. Firstly, the Insolvency Act 1986, contains an important issue with regard to the liabilities of directors of insolvent companies. Thus, criminal and civil liabilities will be imposed if the director of the company knew, or ought to have known, about insolvent liquidation that could not be avoided and still operates the company's business at the same time. The second Act is the Company Directors Disqualification Act 1986, which is intended to protect future generations of both shareholders and companies from the misconduct of managers. Gross incompetence, commercial morality standards violation, or even negligence, are examples of reasons for disqualifying managers. Therefore, the CDDA 1986 Act imposes penalties on disqualified managers who continue to act
223 F Almajid, Conceptual Framework for Reforming the Corporate Governance of Saudi Publicly Held Companies: A Comparative and Analytical Study from a Legal Perspective (Chair For Islamic Financial Studies at Imam Muhammed Bin Saud Islamic University, 2012) Page: 148.
224 J P. Charkham and H Ploix, Keeping Better Company : Corporate Governance Ten Years On (2nd
after the disqualification. Finally, FSMA 2000 serves the financial services industry by establishing a self-regulation structure.225
3.2.4.1 Companies Act 2006
A brief introduction to the Companies Act 2006 in this context is important to show the principal issues related to the legal and regulatory framework. Therefore, the following paragraphs will shed light on the main issues. The Company Law Reform Bill was published by the Government in November 2005 following the need for a revision of Corporate Law. Therefore, late 2006 witnessed the issuance of the Companies Act 2006, which to some extent has updated the previous legalisation and added some important new provisions.226 The Companies Act 2006 has many important features, such as the codification of directors’ duties, the increasing usage of electronic communication with shareholders, and the limitation on directors’ duties being agreed by shareholders. Moreover, proxy right enhancement will ease the process for shareholders in appointing others to attend general meetings and vote. In the context of institutional investors, the Companies Act 2006 provides the power to require them to disclose how they have used their vote, which has responded to the call over a number of years for institutional investors’ voting disclosure. Thus, from
225 F Almajid, Conceptual Framework for Reforming the Corporate Governance of Saudi Publicly Held Companies: A Comparative and Analytical Study from a Legal Perspective (Chair For Islamic Financial Studies at Imam Muhammed Bin Saud Islamic University, 2012) Page: 154.
the previous points, it can be seen very clearly that shareholders’ rights have been improved in several ways by the Companies Act 2006. 227
3.2.4.2 Section 172
Prior to the introduction of section 172, the directors of companies were subjected to the requirements of common law and fiduciary duties. One of the main fiduciary duty requirements concerns the directors exercising their powers in the best interests of the company; however, the evaluation of how the best interests of a company can best be served "is left to the business judgment of its directors and the courts are not prepared to review decisions which have been reached in the appropriate way".228
It may be said that section 172 of the Companies Act 2006 could be described as the 'successor' to some common law and fiduciary duties. Keay stated that, section 172 “has been the most controversial and challenging duty that has been introduced in the Act, and the one that has given lawyers, companies and their directors the most concern”.229 Clearly, section 172 has shifted directors’ duties into a codified statutory statement: “A director of a company must act in the way he considers, in good faith,
227 C A. Mallin, Corporate Governance (4th edn Oxford University Press, 2013) Page: 37-38.
228 A Griffiths, 'Regulating directors' self-dealing in a unitary board system of corporate governance:
the role of the declaration required by the Companies Act 1985, s.317' (1997) Company Financial and Insolvency Law Review 95.
229 A Keay, 'The Duty to Promote the Success of the Company: Is It Fit for Purpose in a Post-Financial
Crisis World?' in Directors’ Duties and Shareholder Litigation in the Wake of the Financial Crisis
would be most likely to promote the success of the company for the benefit of its members as a whole”.230
Moreover, it states six matters that directors have to consider. Firstly, the long term likely consequences of a decision, as it is possible to say that section 172 requires directors to make their ‘decision-making’ more inclusive by imposing this duty on them;231 secondly, the consideration of the interests of the employees; thirdly, enhancing the business relationships of the company with others, such as suppliers and customers; fourthly, taking into account the community and the environment; fifthly, maintaining the reputation of the company through high standards of business conduct, and lastly, recognising the necessity of acting fairly between members of the company.232 However, it has been argued that section 172 could have more of an educational Impact rather than making a change. Again Keay states that section 172 “is not likely to make a lot of difference as far as the corporate governance issues that were problematic in the period leading up to the credit crunch and financial meltdown were concerned”.233 From the above discussion, it appears that section 172 has
230Companies Act 2006.
231 A Keay, 'The Duty to Promote the Success of the Company: Is It Fit for Purpose in a Post-Financial
Crisis World? 'Directors’ Duties and Shareholder Litigation in the Wake of the Financial Crisis
('Edward Elgar Publishing, Inc.' 2012) Page: 54.
232Companies Act 2006. See for examples: John David Hedger (The Liquidator of Pro4Sport Limited) v David Adams [2015] EWHC 2540 (Ch) and Peter Hook v Bernard Sumner and Ors [2015] EWHC 3820 (CH) as the Judge refer to section 172 of the Companies Act.
233 A Keay, 'The Duty to Promote the Success of the Company: Is It Fit for Purpose in a Post-Financial
Crisis World?'Directors’ Duties and Shareholder Litigation in the Wake of the Financial Crisis
importance and could be described as relevant to a large extent, taking into account some related cases such as Re HLC Environmental Projects Ltd, which have tackled the concern of the issue of enforcement.234 However, the fact that it still may be difficult to prove the breach under section 172 makes it merely encourage box ticking at board meetings for now. In fact, section 172 is not a magical solution for making the directors consider the other stakeholders immediately, which means section 172 would promote good governance in the long term by bringing about a healthier debate about English law in the context of promoting enlightened shareholder value.235