Promoting enhanced enforcement of directors' fiduciary obligations: the promise of public law sanctions

Article


Mayanja, James. 2007. "Promoting enhanced enforcement of directors' fiduciary obligations: the promise of public law sanctions." Australian Journal of Corporate Law. 20 (2), pp. 157-182.
Article Title

Promoting enhanced enforcement of directors' fiduciary obligations: the promise of public law sanctions

ERA Journal ID37186
Article CategoryArticle
Authors
AuthorMayanja, James
Journal TitleAustralian Journal of Corporate Law
Journal Citation20 (2), pp. 157-182
Number of Pages43
Year2007
Place of PublicationSydney, Australia
ISSN1037-4124
Web Address (URL)http://www.lexisnexis.com/au/legal/auth/checkbrowser.do?cookieState=0&rand=0.02956362793535472&bhcp=1
Abstract

The substantive law which regulates the exercise of directors' powers is not self implementing. Action must be taken to enforce its observance. The legal system must therefore provide a reliable mechanism for enforcing the law which seeks to protect the interests of companies and, vicariously, the investing community. Unless that is done, the applicable rules are bound to deteriorate into voluntary obligations which the controllers of companies may or may not observe according to their whims. This article argues that dual (public and private) is required in order to achieve optimum enforcement of the law governing directors' fiduciary duties. Further, it advocates enhanced use of public (criminal) law sanctions as a means of promoting greater deterrence of wrongful director conduct. By reason of their stigmatic effects, these sanctions have great potential to deter undesirable conduct. Some of the impediments to the effective use of public law sanctions in this area are examined. Finally, the article explores ways in which the law could be reformed to overcome these obstacles.

Keywordsdirectors' fiduciary obligations; private enforcement; public enforcement; public (criminal) law sanctions
ANZSRC Field of Research 2020480103. Corporations and associations law
489999. Other law and legal studies not elsewhere classified
350208. Investment and risk management
Public Notes

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Byline AffiliationsSchool of Law
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