Directors' concerns: distributions and dividends
Ever since the legal concept of the company was created, there has been discussion about what the purpose is of companies and why they should exist.
Despite the sometimes rather abstract nature of these debates they do matter to directors because it is the directors who are responsible for the company; what it does and how it goes about it. Directors are under a duty to exercise their powers in the best interests of the company but one of the issues that directors need to consider when running the company is the interests of the shareholders, the owners of the company. Jack Welch is famous both for emphasising the importance of shareholder value and describing the idea of having shareholder value as a strategy as “the dumbest idea in the world”. His comments are not as contradictory as might, at first, appear: increasing shareholder value is a desirable outcome of the strategy that the company follows but it should not be a strategy in itself. From the perspective of the directors, in addition to the strategy creating the value, they must also consider how that value should be distributed. It is a fundamental principle of company law that the property of a company belongs to itself and not to its shareholders. For that reason a company cannot simply pay or distribute its property to its shareholders: the Jersey Companies Law sets out requirements that must be satisfied before such a payment or distribution may be made…
If you are registered and logged in to the site, click on the link below to read the rest of the Mourant Ozannes briefing. If not, please register or sign in with your details below.
Click on the link above to download this briefing.
Sign in or Register to continue reading this article
It's quick, easy and free!
It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.Register now
Why register to The Lawyer
In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.
Identify the major players and business opportunities within a particular region through our series of free, special reports.
Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.
More relevant to you
To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.