Stakeholder Theory in Company Law

The Iranian company law only recognizes shareholders but social nature and legal personality of company indicate the relation of this entity to third parties. These third parties have been called "stakeholders" in modern company law that are considered to affect or be affected by the company's actions. Shareholders, employees, customers and financiers are fixed groups of stakeholders in a company and inclusion of some groups also depends on the subject of company`s activity. Currently, there is a tendency to recognize broad scope of stakeholders; however, for legal regimes like Iran, this recognition may be limited. This recognition of stakeholders and its necessity is obvious but this is questionable whether a stakeholder in a company with private capital should be protected. Economic, moral and legal foundations constitute the the bases of the theory of stakeholders. Solving agency problem, avoiding conflicts of interest and maximizing economic value are the economic foundations. Legal and moral foundations argue that stakeholders have inherent value therefore their rights should be respected and ownership restrictions should be applied to owners and managers of a social entity namely company.