Chapter 3: The Legal Aspects
3.1 INTRODUCTION This chapter of the book deals with the legal framework surrounding the roles of various actors in corporate governance. Whereas the ‘agency paradigm’ of corporate governance has always placed shareholders at the centre of corporate governance, we will also study other stakeholders and their relationship with the company, including gatekeepers. This perspective of considering relationships within the whole corporate governance ‘social ecosystem’ extends the focus beyond shareholders and is based on insights from complexity theory. The actors in corporate governance may be classified as internal and external actors or stakeholders. Internal actors include the board of directors, shareholders, and employees. The board of directors is also the principal player in the ownership–management divide prevailing in most UK and US companies. The two groups which form the external actors are stakeholders other than employees and the gatekeepers. Both the internal and external actors are part of the corporate governance social ecosystem (i.e. the whole system that includes all corporate governance actors); they influence each other in varying degrees and this influence changes the thinking, behaviours and relationships over time across the whole system. The first section of this chapter examines the roles of the internal actors of the corporation, and the subsequent two sections discuss the roles of stakeholders and gatekeepers, respectively. This review does not imply that the distinction between gatekeepers and stakeholders can necessarily be made clearly, but it will nevertheless attempt to provide a distinct working definition for these two groups of actors. Stakeholders commonly...
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