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On the other hand, the duty owed to many stakeholders can also lead to directors
being more accountable because they will be answerable to one group or the other
who is not satisfied with their action. 143 Hence, directors will have to take
precautions to reassure all groups or be able to provide satisfactory explanations for
their actions. 144 The possibility of being questioned by one of the stakeholder groups
will certainly reduce the likelihood of directors acting dishonestly. In addition,
directors are not serving the interests of various groups because due to separate legal
entity, there remains only one master, i.e. the company.
Secondly, the right of enforcement of breach by directors remains with
shareholders. 145 Other stakeholders do not have the right to take action against
directors unless they own shares in the company. Shareholders who have the
derivative actions against the directors may not feel inclined to do so because they
will incur the litigation's costs without any benefit accruing to them.
Thirdly, directors will have to balance the interests of divergent groups each time
decisions need to be made. 146 Directors will need time to consider their actions so
that various groups will be satisfied. Directors may not be cognizant of what
constitutes benefits to stakeholders and further, even within the same group
stakeholders‟ interests vary. 147 Directors do not have clear guidelines on how these
competing interests should be addressed and how stakeholders should be informed of
the decision-making. One of the possible solutions is to allow various stakeholders to
143 Hill and Jones above n59 at 145; Phillips above n56 at 22.
144 Ibid.
145 Keay “Corporate Objective” above n40 at 676.
146 Ibid.
147 Ibid, at 677.
147