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was mainly responsible for the challenge to the theory of shareholders as owners of the
company. 23 The communitarianism theory concerns the wider range of stakeholders on
the company. It emphasises that the company‟s economic wealth and social and political
powers affect many more than merely those contractually related to the company. 24 The
theory, therefore, seeks to present that the company recognises and accommodates wider
community interests.
The evolution of the laws which impose regulations in the interests of employees,
consumers or others may limit directors‟ methods of managing the company to maximise
profits for shareholders. 25 Public opinion of the business responsibility towards its
employees and customers also helped to shape the better conduct of business ethics. This
has led to the notion of a company being „professionalized.‟ 26 To achieve a
„professionalized company‟ (i.e. the duty is not owed to the shareholders alone), it is
essential to look at the conduct of the managers/directors instead of the owners. 27 The
view that the company should consider wider community interests has gained much
support, particularly in the public utility field. 28 The notion of social responsibility toward
employees, customers and the general public has gained such popularity that the law has,
to a certain extent, compelled the company to recognise, to a certain extent, the rights of
other persons besides its owners. 29
In 1998, the Labour Government in the UK initiated a fundamental review of the
framework of core company law. The Steering Committee considered the possibility of
inclusion of the stakeholders‟ theory into the company statute. After much consideration,
23 Oliver Williamson “Corporate Governance” (1984) 93 Yale L.J 1197 at 1198-1200.
24 Ibid; Rickett above n7 at 101; Millon above n18 at 1378-1379.
25 Rickett above n7 at 65; Millon above n18 at 1378-1379.
26 Dodd above n13 at 1160
27 Ibid.
28 Ibid, at 1160.
29 Ibid.
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