INTEREST OF THE COMPANY, CORPORATE LAW

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Department of Law.

University of Turin

GROUP 18:

• Mihai Andreas Claudiu
• Quaglino Giulia

• Spanti Arianna

INTEREST OF THE COMPANY

- PROFESSOR PAUL DAVIES

"WHOSE INTEREST SHALL THE COMPANY DEAL WITH?"

B.

A.

The STAKEHOLDER approach takes a view that the directors should balance the interests of different constituencies that make up the company, rather han considering the sole interests of shareholders

The SHAREHOLDER approach sees as the company's objective the maximization of shareholder's interesrs, putting therefore the focus directly on shareholders- Agency Theory: the agent, that corresponds to the director, should act on behalf of the shareholder's interest in running a business

Comparison

1. Conflict between the firm's owners and the managers
2. Conflict between the owners who possess the majority of controlling interests and the minority shareholders
3. Conflict between the firm and the parties with whom the firm contracts

• Three generic problems that might be faced in business firms

• Key concept of the problem: the agent may be incentivized to act opportunistically

the Agency Problem

02

Conflicts of Interest

PARTIES:PLAINTIFFS: John Dodge, Horace dodgeDEFENDANT: Ford Motor Co.ISSUE: breach of director’s duty of loyalty, conflict of interest between director and shareholder, violation of the principle of shareholder primacy FACTS: Ford Motor Co stopped paying dividends to Dodge Brothers, a minority stockholders, so they sued Ford Motor company for not following the best interest of the shareholders, preferring the benefit for the consumers and employers

Dodge v. Ford Motor Co.

ART. 26: ‘’ … Member States shall ensure through adequate safeguards that such transaction does not conflict with the company's best interests.’’

ART. 25 § 3: The transactions shall be submitted by the administrative or management body to the general meeting for prior approval..., ...The administrative or management body shall present a written report to the general meeting, indicating:

ART 25 (2-5), ART 26.

5. the price at which the third party is to acquire the shares.

3. the conditions on which the transaction is entered into;

4. the risks involved in the transaction for the liquidity and solvency of the company; and;

1. the reasons for the transaction;

2. the interest of the company in entering into such a transaction;

Directive 2012/30 EU

Thanks!