Fundamental principles or two informing principles

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Reference no: EM133799933

Question

It got two fundamental principles, or two informing principles. The first one is to compensate the company for any loss. Eg, lets start a classic situation were the directors take the opportunity which belongs to the company , the company should be compensated for it. We came across this many times and we came across this today. There is another principles and that is called deterrence. If minority shareholders can under certain circumstances sue in the name and on behalf of the company, then that should be deterrent directors from acting badly. The thing is, at what pruss? are you prepared to deter directors behaviour. Because this is a business. Company is not really about ethics, it is about laws. If you say as a matter of principles, i will sue this director on this mainor matter , i might get ntg in compensation but it will deter the future behavior. The courts will be suspicious about this bec the fundamental purpose is to compensate. But we got the secondary idea of deterring. So the courts have to balance those two possibilities. explain this.

Reference no: EM133799933

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