Chapter

Reinforcing—and Challenging—the Legal Model

J. E. Parkinson

in Corporate Power and Responsibility

Published in print April 1995 | ISBN: 9780198259893
Published online March 2012 | e-ISBN: 9780191682018 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780198259893.003.0021

Series: Clarendon Paperbacks

Reinforcing—and Challenging—the Legal Model

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This chapter discusses a third duty bearing on the consequences of the separation of ownership and control, the duty to act for a proper purpose. It specifically explores this legal duty to the control of managerial discretion and the promotion of management efficiency. This duty has a significant, indirect role in securing compliance with that objective in two ways. First, it helps protect the democratic shareholder controls from being subverted by management. Second, by safeguarding the shareholders' financial interests in a take-over situation it prevents management from insulating the company from the impact of the market for corporate control. Moreover, the developments in redefinition of management duties are shown.

Keywords: legal model; ownership; shareholder control; corporate control; management duty; proper purpose; management efficiency; managerial discretion

Chapter.  12499 words. 

Subjects: Company and Commercial Law

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