engleski

The purpose of a company

In Croatian law, it is commonly accepted that the directors should manage the company in the interest of the company itself. It has, however, rarely been discussed what is exactly the purpose of a company. In comparative legal systems, the question of corporate purpose is, somewhat simplified, often portrayed as a conflict between shareholder and stakeholder approaches. According to the first approach, the company should be managed primarily in the interests of its shareholders, while according to the latter it should be managed in the interests of all its stakeholders. This paper reaches the conclusion that, in Croatian law, the shareholder approach should be given priority. Shareholders establish a company and bear the direct risk of their investment. On the other hand, the stakeholders are a diffuse notion, with diverse interests and no corporate mechanisms at their disposal. This enables the company directors to exercise wide powers and bear little responsibility. The shareholder approach, however, does not mean that the directors have to follow the wishes of the current shareholder majority. The shareholders’ interests are the objective interests of all shareholders, including those who will become shareholders in the future. The corporate purpose is, thus, to increase their long-term financial benefit. Such interpretation does not have to be at the expense of the stakeholders. They should be protected on two different levels. One is top-down protection, where public regulations force companies to take minimum measures in the public interest. The other is bottom-up feedback from conscientious customers who demand that the company’s conduct satisfies certain criteria.

company purpose, company interests, financial interests, corporate governance, shareholders, stakeholders, workers, takeover law

nije evidentirano