Tackling the issue of the corporate objective: an analysis of the United Kingdom's 'enlightened shareholder value approach'

Ascertaining the objective of public companies has been a matter of debate for many years in many countries, including the United Kingdom and Australia. This has partly been because there has been no definitive statutory pronouncement on the matter. In its new Companies Act 2006, the United Kingdom has included, in its statement on directors’ duties, what, in effect, is to be the objective of companies. This statement is set out in s 172(1). After discussing the shareholder value principle, hitherto regarded as encapsulating the corporate objective in the UK, and the policy and legislative processes that led to the enactment of s 172(1), this article analyses the provision and argues that while the enlightened shareholder value approach provided for by s 172(1) is seen as providing a significant new development in UK law the approach is in fact little different from the shareholder value approach.