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shareholders as well as creditors; 82 thirdly, the public disclosure of such information
will also benefit the community as a whole. 83
The call for reforms of the scheme was due to the failure of the law to recognize
wealth was best generated when all participants operated harmoniously as teams and
the management should appreciate the wider interests in their decision-making. 84
There were mainly two groups of arguments on these matters, the enlightened
shareholder value 85 and the pluralist 86 approaches. The committee held the view that,
in order to implement the pluralist approach, the law on directors‟ duties needed to
be reformed in order to bring it in line with the furtherance of non-shareholder
participants‟ interests. 87 Alternatively, the duty could be enforced by requiring
directors to promote the success of the company, an entity, without regarding any
participants as having an overriding interest. 88 The committee, however, rejected the
approach because directors‟ duties needed to be drafted subjectively to confer a wide
range of discretion and this would involve potential contentious issues. 89 Moreover
82 Ibid.
83 Ibid.
84 Ibid, at [5.1.9]
85 The enlightened shareholder value principle targets to maximize the returns to shareholders as a
whole although it was difficult to fulfill in practice. The management had failed to comprehend that
way to success requires long term relationship and therefore it should not focus mainly on the short
term financial returns. It is important to cultivate the long term cooperation base in trust which will
likely to involve costs in the short run but to bring greater benefits later on and the law had failed to
include this fact- The Steering Group above n54 at [5.1.12].
86 The pluralist on the other hand demands for law reform to include wider interests in the company in
order to generate maximum wealth and prosperity. This approach requires these interests to be
treated as equal rather than subordinate to shareholders‟ interests which inevitably involve the need
to balance the potential competing interest. Hence the duty owe to the company provided in the law
should be extended to those who have made commitment to it such as employees as well as
creditors and not to be applied exclusively to current and future shareholders only- The Steering
Group above n54 at [5.1.13] – [5.1.14].
87 The Steering Group above n55 at [5.1.30].
88 Ibid.
89 Ibid.
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