In reply to hokkyokusei:
> I don't see the relevance of your response. You said that directors had to run a business in the interests of all of it's stakeholders, which isn't true.
“A director of a company must act in a way that 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, and in doing so have regard (amongst
other matters) to –
(a)The likely consequences of any decision in the long term
(b)the interests of the company’s employees
(c)the need to foster the company’s business relationships with
suppliers, customers and others
(d)the impact of the company’s operations on the community
and the environment
(e)the desirability of the company maintaining a reputation for
high standards of business conduct, and
(f)the need to act fairly between the members of the
company.”
If for example a director is taking an excessive remuneration prior to insolvency he is clearly not behaving in a way that promotes the business, does not act fairly between the members of the company, and has no regards for the other stakeholders.
However such cases are rarely prosecuted successfully by creditors because of the "in good faith" requirement which makes it really easy to get away with it. I think the law has changed and they now also look at your experience as a director when trying to decide whether you acted in good faith or not, but it's still very hard to prosecute.
My point is that we should have some kind of mechanism to stop abuse happening before it goes to court, for example give more power to owners to control director's pay, increase liability of directors when pay goes beyond a certain level etc...
Post edited at 10:49