An Analysis of Enlightened Shareholder Value in Light of Ex Post Opportunism and Incomplete Law

In the UK’s Companies Act 2006 the traditional shareholder value principle was modified bythe introduction of the principle of enlightened shareholder value, the primary source ofwhich is section 172(1). Included in this provision is a requirement for directors to have regardfor the interests of certain stakeholders when exercising their duty to promote the success oftheir company, and this article refers to this as the principle of due consideration. Based on theincomplete law framework, this article reveals that the principle of due consideration forstakeholders has the potential effect of checking ex post opportunism on behalf of shareholdersand/or directors against non-shareholding stakeholders. As such, this principle could make apositive and value-adding contribution to all concerned simply because ex post opportunismof any kind is unfair and bad for business. Moreover, our analysis further suggests that if thepotential effect of the principle of due consideration is to become real, a process of trial anderror in the form of actual cases brought to, and tried in, the courts over time is required.