WHAT ARE THE POSSIBLE REASONS LEADING TO THE FINANCIAL CRISIS AND WHY IT IS RELATED TO CSR AND WHAT ROLE CAN COMPANY LAW PLAY IN ACHIEVING GOALS IN PROMOTING THE SUCCESS OF THE CORPORATIONS AND AVOIDING THIS KIND OF FINANCIAL TURMOIL FROM HAPPENING AGAIN?

WHAT ARE THE POSSIBLE REASONS LEADING TO THE FINANCIAL CRISIS AND WHY IT IS RELATED TO CSR AND WHAT ROLE CAN COMPANY LAW PLAY IN ACHIEVING GOALS IN PROMOTING THE SUCCESS OF THE CORPORATIONS AND AVOIDING THIS KIND OF FINANCIAL TURMOIL FROM HAPPENING AGAIN?

Ø  REASON FOR THE 2008 FINANCIAL CRISIS

The financial crisis of 2008 was due to the failure of corporate governance system which is given below in the following diagram;

  

Ø  WHY IT IS RELATED TO CSR

Its relates to CSR because the companies for  achieving short-term benefit (profit maximization for the shareholders) ignore their responsibilities towards not only primary stakeholders, such as employees and creditors, but also secondary stakeholders, such as customers, suppliers, environment, local communities and media etc

Ø   ROLE OF COMPANY LAW IN ACHIEVING THE GOALS OF PROMOTING THE SUCCESS OF THE CORPORATIONS AND AVOIDING THIS KIND OF FINANCIAL TURMOIL FROM HAPPENING AGAIN

The Companies Law Act 2006 has the purpose of introducing a modern, updated and flexible legislative corporate framework with clear and simple rules, in order to promote the competitiveness of UK corporations. Companies Act 2006 sets out a new statutory statement on directors‟ duties which is described as their “general duties” in place of the common law and replaces Part X of Companies Act 1985

Section 172 of the recently enforced Companies Act 2006 will be examined, mainly focus on emphasis of “long term” interests of the company and inclusions directors‟ duties towards various stakeholders explicitly mentioned in subsections of Section 172.