"Most large businesses buy their corporate charters from the state of Delaware. And the law of Delaware is clear about corporate purpose. The chief justice of the Delaware Supreme Court, Leo Strine, put it simply in a recent law review article: “Directors must make stockholder welfare their sole end.” In cases where directors have acknowledged sacrificing shareholder interests for other groups, Delaware courts have found those directors violated their fiduciary duties."
http://www.nytimes.com/roomfordebate/2015/04/16/what-are-cor...
I've also read articles by "authors" arguing otherwise, so maybe the answer isn't all that clear. But my tendency is to believe what a legal professor says, and the above paragraph sounds pretty convincing.
"Delaware's duties are similar, they give the directors huge latitude"
In the UK law is basically exactly the same as the Delaware law. As long as the directors are acting in good faith they can do pretty much what they like. It is up to the shareholders to show bad faith/gross negligence on behalf of the directors
This part is key. When the directors actually admit that they are harming shareholder interests, they are opening themselves to a lawsuit. When they make a plausible claim that their actions are in the shareholders' interest, even if some of the shareholders disagree, they are fine. Courts do not second-guess business judgement.
To overrule the directors in court, shareholders have to show that the directors are acting in bad faith, not just that the actions will seemingly harm the company.
As long as the directors can show they have made a "good faith" attempt to manage to the benefit of the shareholders then they are covered.
Just my pov though.
A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to—
(a)the likely consequences of any decision in the long term, (b)the interests of the company's employees, (c)the need to foster the company's business relationships with suppliers, customers and others, (d)the impact of the company's operations on the community and the environment, (e)the desirability of the company maintaining a reputation for high standards of business conduct, and (f)the need to act fairly as between members of the company.
And that's pretty much it. This gives directors massive wide ranging latitude to act. Delaware's duties are similar, they give the directors huge latitude - companies are not legally mandated to e amoral profit machines.