In Whose Best Interests? Directors' Duties in Government Owned Corporations

Government corporations (statutory corporations and government owned companies) are established by Parliaments and governments to pursue a particular purpose with some degree of independence from government.

The governance model is based on company governance: there is a board whose members owe duties to the corporation. This approach ignores the substantial differences between a board of a private sector company and a board of a government corporation.In particular, a duty (statutory or general law) to act in the best interests of a government corporation makes little sense. Michael Lishman proposes that this is replaced with a duty to advance purpose. Michael will further argue that government corporation boards have an important role to play in protecting the independence of the corporation and from the ‘costs’ that arise from government control.

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