Written evidence from the Durham Company Law Project (CGV0029)

Abstract

Executive Summary *The success of the company should be understood as the success of the business enterprise which it conducts. *Qualifying employees should be recognised by statute as members of the company and any group that employs them. The company can then be understood as the legal reflection of the human community of enterprise that produces goods and services and serves customers and society as a whole. Deemed employee membership would empower directors to pursue the success of the enterprise in which long-term shareholders and workers have a common interest. Without it, s. 172 is a dead letter. *Such recognition would not be sufficient without some transfer of sovereignty over takeover decisions from shareholders to directors and workers. Directors need to be free to pursue the success of the enterprise without the threat of hostile takeover. Furthermore, since an enterprise may be worth more to shareholders dead than alive, the consent of workers as well as of long-term shareholders should be required for takeovers recommended by the directors. *The election of worker directors follows naturally from the recognition of deemed membership and this understanding of success helps to overcome the conflicts of interest. Trade unions should play a complementary but separate role.