Enforcement of corporate conduct under the Equitable Maximisation and Viability principle.

Abstract

Legal academics and practitioners have engaged in intense elaboration and defence of differing perspectives about the appropriate standard of corporate conduct, and unresolved debates surrounding this contemporary legal issue have proved intractable. The classical scholarship has become ghettoised in self-supporting ecosystems of inflexible exchange. Of necessity, a new conceptual approach has been proposed to address in an affirmative fashion the inevitable penumbra of uncertainty and institutional indeterminacy of corporate law, specifically in regard to stipulating an appropriate standard of corporate behaviour for the myriad of organisational activity. This is the Equitable Maximisation and Viability principle (EMV). This paper focuses on providing for some meaningful enforceable standards that ensure the principle is not precatory. Before this can be undertaken, it considers in a systematic and comprehensive manner corollary questions as to whether substantive private enforcement procedures can, and should, be used to monitor and challenge directors’ decision making. These insights allow the paper to open up the enforcement issue. The principal part of the paper identifies and examines various alternative ways of enforcing the principle and then argues for the use of one credible mechanism.