The recent up gradations in the UK corporate law

 

2019 witnesses businesses continue to encounter high levels of political insecurity in the UK as the minority Conservative Government, led first by Prime Minister Theresa May and then by Prime Minister Boris Johnson, was incapable of securing to secure parliamentary support for any form of Brexit.

With the Conservative Party having got a decisive majority in the House of Commons in the General Election held on December 12, 2019, the big question is whether there is now a light at the end of the Brexit tunnel. While the UK will now almost surely leave the EU on January 31, 2020, the path from there is still opaque.

As what is expected, the UK leaves the EU considerably on the terms of the revised Withdrawal Agreement that was agreed to with the EU in October 2019, a transition period will apply until December 31, 2020. During this period, EU law will continue to apply in the UK in much the same way as it did early to Brexit, and so most businesses are unlikely to experience any major differences in the UK legal framework within which they operate during 2020.

But what the legal system will look like from 2021 onward is very much still up in the air for corporate law firms. In particular, it is not yet clear what the future trading relationship between the UK and the EU will look like, which will depend on the outcome of sour UK-EU negotiations that are likely to occupy much of 2020. And with Prime Minister Johnson having ruled out any extension to the transition period beyond December 31, 2020—which many consider to be an unworkable timeframe for the conclusion of trade negotiations of unparalleled scope—there remains a genuine risk of a "no trade deal" Brexit after this date.

By way of background:

The main role of a director of a UK company2 requires the director to act in the way that he or she considers, in good faith, would be most likely to promote the success of the company for the benefit of its shareholders as a whole. For a commercial company, "success" will typically mean a long-term increase in its financial value. This duty is the UK equivalent to the Delaware duty of loyalty.

In attempting to encourage the growth of the company for the benefit of its shareholders as a whole, a director should consider a non-exhaustive list of extensive social factors, including the interests of the company's employees, the need to fuel the company's business relationships with suppliers and customers and the effect of the company's operations on the community and the environment.

In the event of a dispute between what would benefit the company's shareholders and what would benefit one or more of these wider social factors, the interests of shareholders must succeed. Nonetheless, this so-called "enlightened shareholder value" principle obligates the directors of corporate law firms in London to take into consideration the interests of stakeholders other than shareholders in their decision making.