This essay discusses the phenomenon of separation of ownership and control by arguing who is the real owner of company. By discussing the different interests of members this essay identifies that company is considered as real entity which has own interest from its members. This phenomenon is supported by different cases and current legislative norms. [1] The main concern of the modern company is to find whose interest should be issued as primary purpose of the company. Some scholars argued that company and its employees should serve to desires of shareholders who are owner of the company. [2] However, this argument influences the relationship between principal and agent hence agency problems have been concerned as the most unresolved issue of company.

Phenomenon of separation, argument

Table of Cases (UK)

Automatic Self-Cleansing Filter Syndicate Company, Limited v Cuninghame [1906] 2 Ch. 34

Percival v Wright [1902] 2 Ch. 421

Bhullar v Bhullar [2003] B.C.C. 711

Industrial Development Consultants Ltd v Cooley [1971] 1 W.L.R. 443

Table of Cases (International)

Dodge v. Ford Motor Co [1919] 204 Mich. 459.

Asmussen v. Quaker City Corp [1931] 18 Del. Ch. 28

Auer v. Dressel [1954] 306 N.Y. 427

Table of Legislation/ Statutes

UK Companies Act 2006

Table of Legislation (International)

The Public Company Accounting Reform and Investor Protection Act 2002

Books

Dignam and J. Lowry, Company Law, (11the edn, Oxford University Press, 2020)

T. Clarke ‘Introduction: Theories of Governance -Reconceptualizing Corporate Governance’ (London Routledge 2004)

Articles

M. Friedman ‘The Social Responsibility of Business is to Increase its Profits’ (1970) The New York Times Magazine, 33, 122

M. Dodd ‘For whom are corporate managers are trustees?’ (May, 1932) Harvard Law Review, Vol.45, No.7, 1145-1163

Berle ‘For whom are corporate managers are trustees?’ (Jun., 1932) Harvard Law Review, Vol.45, No.8, 1365-1372

L. Lan and L. Heracleous ‘Rethinking agency theory: The view from law’. (April 2010) The Academy of Management Review, Vol.35, No2, 294-314

E. Williamson ‘Corporate board of directors: In principle and in practice’ The Journal of Law, Economics, & Organization, V24 N2. 247-270

F. Fama ‘Agency Problems and the Theory of the Firm’ (Apr, 1980) Journal of Political Economy, Vol.88, No.2, 288-370

M. Blair and A. Stout ‘A Team Production Theory of Corporate Law” (Mar., 1999) Virginia Law Review, Vol. 85, No. 2, 247-328

C. Jensen & H. Meckling, ‘Theory of the Firm: Managerial Behaviour, Agency Costs and Ownership Structure’ (1976) 3 Journal of Financial Economics 305-360

C. Coffee ‘A theory of Corporate Scandals: Why the USA and Europe differ’ (2005) Oxford Review of Economic Policy, Vol. 21, No. 2, 198-211

Alchian and H. Demsetz ‘Production, Information Costs, and Economic Organization’ (Dec., 1972) The American Economic Review, Vol. 62, No. 5, 777-795