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discretionary powers and are able to play groups against one another by claiming that
their actions benefit some groups. The problem of granting discretion to directors
was emphasised by the Company Law Review Steering Group, which stated:
in particular that this would impose a distributive economic role on directors
in allocating the benefits and burdens of management of the company‟s
resources; that this role would be uncontrolled if left to directors in the form
of a power or discretion; and that a similarly broad role would be imposed on
the judges if the new arrangement took the form of an enforceable obligation
conferring rights on all the interested parties to argue for their interests in
court. 140
In addition, the Hampel Report accentuated the limitation of the theory when it
stated:
To redefine the directors‟ responsibilities in terms of the stakeholders would
mean identifying all the various stakeholder groups; and deciding the extent
and nature of the directors‟ responsibility to each. The result would be that
the directors were not effectively accountable to anyone since there would be
no clear yardsticks for judging their performance. This is a recipe neither for
good governance nor for corporate success. 141
Nevertheless the Report acknowledged that in order to successfully pursue the long
term objectives of shareholder value, it is essential to foster and maintain good
relationships with all stakeholders. 142
140 The Steering Report above n27 at [2.12].
141 Final Report of the Committee on Corporate Governance (London, January 1998) at [1.17].
at 1 March 2009 [Hampel Report].
142 Ibid at [1.18].
146