A CRITIQUE OF THE SEPARATION OF OWNERSHIP AND CONTROL OF COMPANIES UNDER COMPANIES AND ALLIED MATTERS ACT 2004

📄 Project Abstract

Undoubtedly, the corporation has become one of the most powerful forces in twentieth century economies. It is both a method of property tenure and a means of organizing economic life. The corporation's separation of ownership into component parts, control and beneficial ownership has brought into sharp focus the fundamental divergence between shareholder and management interests. With sole proprietorships, the owners are usually the same people who manage and operate the business. But in large companies, corporate officers manage the business on behalf of the owners. This separation of ownership and control creates a potential conflict of interests. In particular, managers may care about their salaries, fringe benefits, or the size of their offices and support staff; or perhaps even the overall size of the business they are running, more than they care about the shareholders' profits. This agency problem caused by the separation of ownership and control has long been a great concern gl...