In other words, shareholder primacy was not just retained but now made legally explicit in Section 172 of the UK Companies Act (2006): “A director of a company must act in a way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole…” The Group also suggested that directors’ duties be defined in law. They were to serve the interests of shareholders, first and foremost, but also had to “have regard” to wider interests, including employees, customers, suppliers and the wider community. This “enlightened shareholder value” objective was to be supported by public accountability, with annual reporting on how companies were meeting their wider interests. 15 The findings of the review were drafted into legislation, with the Company Law Act of 2006. Under it, shareholders were given new legal rights to initiate proceedings against directors if they breached their responsibilities. And the precise role of the “have regards” provisions  13  Empirical evidence appeared to support this case. Companies in which shareholders had stronger rights relative to management had higher stock returns and relative to the market (Gompers, Ishii and Metrick (2003)), while acquisitions involving companies where there were stronger takeover defence measures tended to have lower shareholder returns (Masulis, Wang and Xie (2007)). 14  See Chapter 1 of The Company Law Review Steering Group (1999). 15  See paragraph 3.2 of The Company Law Review Steering Group (2000).
Philipp Hildebrand: The global financial crisis – analysis and outlook Summary of a speech by Mr Philipp Hildebrand, Vice-Chairman of the Governing Board of the Swiss National Bank, at the NZZ-Podium, Zurich, 5 February 2009. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  We are currently experiencing the most severe and most complex financial crisis in several decades. It has affected many people around the globe, and finger-pointing and casting blame happen all too easily. Yet only a careful investigation of the responsibilities is likely to point to ways in which our financial system, and ultimately our economy, can be made more resilient once this crisis has been overcome. Financial markets react to incentives, and these incentives were misplaced in the past. It is in our power to start lobbying for clearly defined and risk-limiting conditions. If the responsible authorities wish to enact more stringent regulation, we ought to give them our unconditional support. The National Bank is determined to employ all the means at its disposal to ward off an economic contraction. BIS Review 12/2009  1