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CHAPTER 6 THE INTERESTS IN THE CORPORATION
6.1 Introduction
The word „interest‟ cannot be assigned to any particular definition. It is one of those
words, which not having any superior genus, cannot be defined in an ordinary way. 1
It can be measured according to Bentham in terms of pain and pleasure accorded to
an individual. As such, a thing is said to promote the interests, or to be for the
interest of an individual when it tends to increase the sum total of pleasure or to
diminish the sum total of pain. 2 A person can be said to have an interest in any object
if it tends to produce benefit or advantage or to prevent the happening of mischief or
loss. 3
Bentham‟s concept of pain and pleasure can be translated into interests of various
groups in a corporation. Shareholders whose interests are equated by the court to be
the interests of the company have interests in exchange of capital injected into the
corporations. By virtue of their contribution to the company, shareholders have been
recognised as owners, though they do not own the assets of the company. 4
Shareholders‟ interests in the corporation is said to be parallel with the corporation
because both want profit maximization.
Over time, the company has come to be viewed as „sets of contracts‟ where the
company serves as the common party to contracts with managers, shareholders,
1 Jeremy Bentham, An Introduction to the Principles of Morals and Legislation (University of London
The Athlone Press 1970) at 12.
2 Ibid.
3 Ibid.
4 Paddy Ireland, Ian Grigg-Spall and Dave Kelly, “The Conceptual Foundations of Modern Company
Law” (1987) 14 JL& Soc‟y 149 at 152.
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