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(A) Although section 172(3) Companies Act 2006 refers to the �duty imposed by this section�, the reality is that section 172(1) does not impose any legal duties on directors, but comprises only soft law encouragement to directors to comply with stakeholder protection laws � outwith the 2006 Act � applying within the United Kingdom. Please discuss this proposition.
(B) Milhaupt & Charny Plc (M&C � a company incorporated, managed and controlled in England & Wales) manufactures and distributes a variety of pharmaceutical products through a network of overseas subsidiary companies and overseas permanent establishments.
One of M&C�s latest ventures is a proposed factory in the Republic of Sahbelstan (a newly independent State which is recognised by the United Kingdom). The government of Sahbelstan is anxious to attract industry to the territory so as to provide employment for its workforce; local outlets (to industry) for its wealth of raw materials from forestry and agriculture; modern consumer products produced locally; improved export earnings; and tax revenue. The Board of M&C has already had preliminary talks with the government of Sahbelstan, and the Board has also assessed the legal system in Sahbelstan. The Board has taken the view that manufacturing many of its latest pharmaceutical products in Sahbelstan is a good idea because, apart from historic company laws and insolvency laws, there are no business laws which would hamper the manufacturing, local distribution and export of its products.
The Board has taken the advice of the company�s Senior Legal Counsel, who has advised that the Board is under a duty to take full advantage of the business facilities and legal system in Sahbelstan because of the shareholder primacy rule provided for in the English Companies Act 2006. Senior Legal Counsel has also advised that the 2006 Act does not apply beyond the territorial boundaries of the United Kingdom and that, therefore, there are no constraints on what the Board proposes to do in Sahbelstan, regardless of the anticipated problems with the company�s manufacturing processes.
The Chairman of the Board, Alicia Webster, is not so sure about the advice given by Senior Legal Counsel, and she has asked you to provide independent advice to the Board. Please provide that advice on the issues arising out of and connected with the venture in Sahbelstan.
(C) Please analyse, compare and contrast the relationship between the issues in Part (A) and the issues in Part (B), identifying and commenting on similarities and discrepancies between the issues.
Parts (A) (B) and (C) above comprise the whole question. You are required to respond to the whole question by preparing a single, coherent essay which is 1,500 words in length (+ / – 10%).
Although marks are not awarded separately for each of the three parts, your overall mark for this essay will be compromised if you fail to answer each part effectively.
This assessment carries 30% of the total marks for the module.
The essay must be prepared and typed by you; presented in Times New Roman, font size 12; with 1.5 spacing; and with standard margins (2.54cms top and bottom, and 2.54cms left and right). Please remember to number the pages, and to use one side only of each sheet of paper.
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