Page 185 - DCOM106_COMPANY_LAW

Company Law

Notes No business corporations however humble, is purely a private or personal office of its promoters
and/or its managerial personal; it has to function with a certain kind of social control imposed
both from within and without.
No business corporation can be regarded as a purely profit making organization. The
establishment of any business corporation is attended with not only legal and economic
consequences but with many social consequences. Therefore, the corporate managers have to
treat the corporations not only as important economic institutions but also as a major force for
bringing about and managing social change.

11.3 Corporate Managers as Trustees

The corporate managerial personnel stand in a fiduciary relationship towards the corporation
for which they are working. This relationship is based on the premise that they have a privilege
to control the resources of the corporation. They have powers – both financial and non-financial.
They are vested with discretionary powers in a number of situations. They are vested with
discretion, in relation to management and superintendence of the corporation’s affairs. They are
not mere employees of the corporation. They can no longer conform themselves to the employee-
employer relationship. They are not only employees but also agents and trustees for the
corporation.
As an agent, a manager firstly, should not make use of the corporate opportunities for his
personal gain. Secondly, he should carry out his duties with as much skills as possible.
A manager should also realize that he is a trustee for the corporation for which he is working.
He is however, not a trustee in the strict sense of the term in as much as no ownership or
property is vested in him in his capacity as a manager. Nevertheless, in certain respects, he is in
the position of trustee for the corporation. Firstly, he is a trustee of resources, which come into
his hands or which are actually under his control, he will be held liable to make good money. In
the second place, a manager is in the position of a trustee for the corporation as regards the
exercise of all powers which he is authorized to exercise, on behalf of the corporation. In the
third place, a manager’s position partakes of the fiduciary character of trusteeship, so that he is
precluded from allowing the interest of the corporation to clash with his own interest.

11.4 Corporate Managers as Protectors of Interests

The fact that a manager occupies a fiduciary position in relation to his corporation raises a few
more questions. Is a manager not in a position of trust in relation to consumers of the products
of his corporation? Is he not in a position of trust in relation to the employees of the corporation?
What is his position vis-à-vis suppliers, dealers competitors, etc? How does he stand in
relationship to the community in which the corporation exists? These questions are a subject of
considerable debate and the consensus is in favour of answering these questions in the affirmative.
The managers owe responsibilities to employees, consumers and the community at large. As a
corporation has social implications, it may be called a ‘public’ institution. In this sense, managers
are public trustees. Therefore, the managers have to keep in mind all interests whether internal
or external which are affected by the operations of the corporation.
Consequently, social consciousness and duty to the society must become an integral part of the
norm of manager’s responsibilities. All this carries the manager much beyond the scope of a
mere commercial manager. He has to manage the corporation to include social good. The
managers are the administrators of a community system and the wealth of the country is
controlled by them. This gives the managers the economic power to affect the lives of the masses
with every position of power, law implies certain responsibilities. Therefore, the managers

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