Comparative Law Researches

Comparative Law Researches

Promote the Success of the Company; A Duty for Director (Study in English and Iranian Law)

Authors
Mohammad Issaei Tafreshi
Habib Ramezani Akerdi
Hamid Reza Abbasimanesh
Abstract
The artificiality of the legal basis of company requires the involvement of natural person in its management. Appointment of director is accordingly prescribed. Management of the company requires setting limits to the powers and duties of directors in order to avoid arbitrariness. The latest duty foreseen for better management of the company is to promote its success, and this is an innovation of the English legislator. Corporate governance includes the “primacy shareholder theory” and “stockholder theory” that the English legislator, in its new regulation, has tried to establish a balance between the two. To attain this goal, the legislator has focused on “enlightened shareholder value”, and obliged the directors to abide by requirements to achieve other goals as well. We have no precedent for such a duty in the Iranian law, and due to lack of safeguard it is not possible to impose on the directors. Fiduciary duty also creates merely a negative commitment whereas duty to “promote the success of the company” is a positive commitment.
Keywords
Promote the success of the company
Primacy shareholder theory
Stockholder theory
Subjective test
Enlightened shareholder value
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