Sections 171 and 172 can support the shift to stakeholder capitalism, says Professor Bob Garratt—but only if they are taken seriously and enforced.
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New legislation will not be needed for corporate governance reform resulting from a move to a stakeholder capitalism model, says a leading academic.
In an article for the Royal Society of Arts, Bob Garratt, a visiting professor at Cass Business School and a board consultant, argues that the UK is already equipped with the legal framework it needs for a new era of governance in Sections 171 and 172 of the Companies Act 2006—they simply need to be taken seriously and enforced.
According to Garratt, the Companies Act “ forms the legal basis of corporate governance, which I still prefer to call ‘board effectiveness’.
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