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‘Enlightened Shareholders Value’ Approach under Section 172 of the UK Companies Act of 2006: An Analysis

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Author Affiliations

  • 1Law Department, Bahria University, Islamabad, Pakistan
  • 2International Relations Department, University of Balochistan, Pakistan

Res. J. Recent Sci., Volume 6, Issue (6), Pages 38-42, June,2 (2017)

Abstract

Section 172 of the Companies Act 2006 of the United Kingdom (UK) is claimed to be one of the significant enactments in the history of company law in the UK. By adopting the ‘enlightened shareholder value’ model, in comparison to the ‘shareholder primacy’ approach, this section requires the directors to consider the stakeholders’ interests while promoting success of the company. However, in reality, the ‘enlightened shareholder value’ approach closely resembles with the ‘shareholder primacy’ approach. This is because, in practice, interests of the stakeholders are likely to be compromised in promoting the shareholders’ interests.

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