Navigating UK Corporate Law: Barriers and Enablers


1.1 Introduction

Business obstacles and current laws are vital in formulation of corporate laws[1]. This dissertation aims to shed light on factors that either enable or limit corporate laws in the UK. This chapter presents the background information of this dissertation.

1.2 Background to the Study

Firms operate under a regulated legal environment, and these regulations have significant importance in society[2][3]. Furthermore, the laws presenting companies’ operational parameters have a historical revolution[4]. Generally, the role of laws in corporate operations has undergone varied progress[5]. Some specialists and scholars doubted the importance of corporate laws in the past. However, corporate laws have shown substantial significance in society today[6][7]. Nevertheless, implementations and developments of these laws are associated with some barriers and enablers.

Developed compelling ideas and theories have addressed implementation and enforcement issues of corporate laws[8]. Designing a stable legal system to govern economic aspects faces challenges in society. Corporate laws today, for instance, govern companies’ operations that involve financial concepts in society. These laws, therefore, face several challenges worldwide[9]. This research, therefore, aims at establishing these barriers and influencers and how they impact the implementation of these laws in UK companies.

1.3 Statement of the Problem

Corporate laws present the rights and obligations of businesses in the UK. The corporate laws cover more significant corporate issues such as shareholders’ rights and business obligations[10]. The principal-Agent issues present the responsibilities of stakeholders and the businesses which give the stakeholders legal immunity in terms of the roles of the agents as actors of their principals[11][12]. The solution to the principal agents has been a center of attraction in the past years with companies and scholars attempting to implement methods of controlling the problem[13][14].

There is a grave need of ensuring that all the aspects necessary for corporate laws enforcement are tightened in the UK. Corporate rules’ success is associated with the principal-agent problem concepts[15], corporate governance modes, litigation and court prospects, and regulatory traits from the internal and external business environments[16]. Reisber argued that the UK’s most recent corporate legislation, The UK’s Companies Act of 2006, has some legislative and operational flaws requiring amendments[17]. Therefore, addressing the amendments and solving the issues from both the internal and external corporate environments regarding corporate laws implementation is imminent thus the relevance of this dissertation[18].

1.4 Objectives of the Study

The following purposes will lead this research

  1. To shed light on the principal-agent problem’s concepts and its contributions to the UK’s corporate laws’ current status.
  2. To determine the extent to which internal corporate governance, Norms and realities impact implementation of corporate laws in the UK.
  3. To establish litigation and court aspects and the extent to which they impact UK corporate laws enforcement.
  4. To determine the extent to which external regulatory traits of companies impact corporate law enforcement in the UK.

1.5 Research Questions

The following Research Questions will lead this study

  1. What role has the principal-agent problem played in the implementation of corporate laws in the UK?
  2. How have the internal corporate governance, norms and realties affected the implementation and enforcement of corporate laws in the UK?
  3. How have litigation and court aspects affected the implementation of corporate laws in the UK?
  4. How have the external regulatory aspects of companies in the UK impacted the implementation of corporate laws in the country?

By addressing the above questions, the research will address the barriers and enablers of corporate laws in the UK.

1.6 Significance of the Study

Corporate laws are important in controlling issues such as business scandals[19][20] and financial crimes. Generally, regulations in business environment influence legitimacy thus performance[21]. The corporate laws’ regulations also effectively control organizations’ economic dynamics[22][23]. Generally, these laws cause society to criticize poor corporate performance, thus influencing change for the greater good[24][25]; addressing the issues and advantages that these laws face in the UK helps promote the knowledge about how to improve the current corporate laws situation.

1.7 Scope of the Study

This study will be limited to corporate rules, their enablers, and barriers in the UK.




2.1 Theoretical Framework

Historically, corporate laws were grouped under the commercial rules in continental Europe[26]. Corporate laws cover stakeholders, shareholders, personhood, and fiduciaries. The purpose-based theory presents a clear and conclusive explanation of all these groups[27]. The mentioned theory also combines policy analysis and existing laws on corporate operations. Also, the agency theory is vital when analyzing corporate laws. Therefore, this study will focus on these theories.

2.2 Conceptual Framework

The figure below presents a logical diagram with all the study variables and how they relate to each other.


2.3 Impacts of Principal-Agent Problem to the corporate laws

The principal-agent concept presents the issues arising from the relationships between the companies’ employees and stakeholders[28]. The agent often encounters a dilemma with whether to act based on the interests of their principals or themselves. This theory is vital for every corporate operation[29]. The conflict of interest influences the agents to forego the rules in order to increase their gains.

Ross postulated that the principal-agent problem is often the center of corporate operations as it promotes rectification of the distributive inefficiencies in companies[30]. Generally, shareholders in firms avoid extra costs and liabilities[31]. As result, most investors and shareholders allocate control tasks to managers[32]. From the explanation of the concept, the principal-agent theory is viable for the corporate laws implementation situation today as it hinders companies operations and adherence to rules

The positive agency theory presents that the actions of the agents and principals are predicated on the incentives and information by the principal and agents in a contract. Pepper and Gore disagree with the above theory claiming that principal and agent’s actions have to follow clearly defined law[33], thus the development and perceived importance of corporate laws today. There is a deficiency of studies directly linking this problem to the successful implementation of corporate laws. This study, therefore, aims at addressing this gap by using UK’s companies as examples.

2.4 The relationship between internal corporate governance and corporate laws

Corporate governance is a key non-financial performance determinant in companies[34]. Company and country’s cultural norms and legislation aspects play a vital role in ensuring proper governance[35]. Ntim postulated that internal corporate governance is a significant determinant of performance[36]. On the other hand, internal corporate control enhances fairness, transparency accountability, and responsibility[37]. A study by Alqadasi and Abidin found that internal corporate control models significantly affected audit qualities in Malaysia[38].

By addressing corporate governance, policy makers of company laws may develop relevant and reliable rules[39]. Corporate governance is one of the crucial topics in society[40]. The implementation of corporate laws requires accountability by companies[41][42]. Corporate laws cover most of the operational parameters of companies. For instance, company laws cover the needs and parameters for company audits in society. The audits in turn increase governance[43], thus, the importance of relevant corporate governance[44][45].

Corporate governance controls the board and other managerial aspects of companies[46]. Mechanisms such as norms and culture determine company performance thus affecting company operations. As a result, reliable and effective management is a significant determinant of the implementation of corporate laws[47]. This study therefore, adds to available literature on corporate governance.

2.5 Litigation and Court concepts and corporate laws

The court practices and strategies for litigating corporate laws largely promote their implementation[48]. For instance, Implementing actions such as transfer of pricing for effective litigation assist in preventing tax avoidance worldwide[49]. Geis outlined that shareholders have recently attempted to address a change that covered the launching of information lawsuits to govern company information as a crucial company asset worldwide[50]. Also, corporate social responsibility inclusion in corporate laws presents the significance of litigation and court practices in promoting corporate laws[51].

Litigation and court procedures of criminal activities involve involving the defendants of their rights and then fairly tried in court[52]. In companies, leverage and risks are vital and it is the role of the companies to dissect these aspects and manage them[53]. Furthermore, leverage management and risk mitigation techniques have to abide by relevant regulations. Alduaij presented the aspect of corporate culture and religion in the implementation of corporate laws in society by arguing that contracts consisting of companies from different religions or cultures have to consider how disputes will be solved[54]. For instance, the difference between Christian beliefs and the Islamic sharia laws[55] have to be bridged effectively by courts and litigation procedures.

2.6 Company External Regulatory Aspects and corporate Laws Success

Implementing and enforcing corporate laws is a complex endeavor that requires contributions from different societal sectors. Law enforcement agents and their practices in society play a vital role in the enforcement of these laws worldwide. In Brazil, the focus of the legal system on individual crimes has been the main cause of the increased corporate criminal activities[56]. From the above example, companies’ external environment factors, especially regulatory aspects are vital in the implementation and success of corporate laws. Berglof et al. postulated that the written codes and laws are not enough for an appropriate business environment. Enforcement is a requirement in the implementation process[57].

The degree of respect for public rights is a significant determinant of development in a country[58]. As a result, law enforcement and the external environment in businesses are important for ensuring corporate laws’ success. A study conducted in the UK by Armour et al. established that enforcement of the corporate laws improved outcomes in takeover litigations. However, corporate enforcement aspects are not to the required standards generally[59]. Generally, external regulatory aspects such as enforcement models and actions are vital for the success of corporate governance in society[60].

Jofre recommends the use of compliance management systems in solving corporate criminality in Spain[61]. The public interest regulatory prospects affected the corporate governance practices of companies in the European and USA economies[62]. Another example is the cross-listing regulatory parameters that have influenced investment practices in the UK and USA[63].  Minciullo further postulated that publication and focus on corporate actions towards sustainability has made it a necessity and widely practiced norm[64]. The enforcement aspects are therefore significantly important in ensuring the success of corporate law integration.

2.7 Conclusion and Research Gap

This literature review presents relevant literature on the research topic. Generally, from the studies reviewed, the implementation of laws in society is dependent on different aspects. This literature review presents the principal-agent problem, corporate culture, norms and realities, litigation and court practices and external environment aspects as the key aspects affecting implementation of corporate laws in society today. The studies in this literature review, however, covered the concept from a broad perspective. All the above elements are not directly and specifically linked to the outcomes of corporate laws in the reviewed studies. This study therefore presents a focused research that directly links the principal-agent aspects and the corporate internal and external factors to the success of corporate laws and governance in UK. Therefore, this study significantly contributes to the available literature of corporate governance.




3.1 Research Design

The adopted research design plays a vital role in ensuring a research conclusion’s accuracy[65]. Qualitative methods present detailed analysis and quantitative methods presents numeric representation of data. As results, they are useful in different ways[66][67]. Nevertheless, all the processes are beneficial in problem-solving[68][69]. Mixed research method has been receiving enormous attention due to its importance[70][71]. Therefore, implementation of this method has rapidly increased in popularity recently[72][73]. The research will therefore, present qualitative and quantitative data thus ensuring accuracy by quantitative and detailed phenomena addressing using qualitative data[74][75] thus validity.

3.2 Data Collection

This research will use document and thematic analysis for data collection[76][77]. Thematic and document analysis are some of the recently developed practical data collection methods and are widely implemented today[78][79]. Thematic analysis is a viable method that emphasizes information extraction from available literature[80][81]. The extraction is always based on suggested best practices and models of data collection such as semantic and latent data coding[82][83] or theme identification[84]. Thematic analysis is implemented in different disciplines today and there are step by step procedures to an effective approach[85]. This study will therefore use content analysis and thematic analysis[86]. Therefore, the study will analyze available relevant information.

3.3 Validity and Reliability

This research will ensure validity by using descriptive phenomenology[87]. Appropriately thematizing the meaning of information in available literature is one tool that this research will use to ensure validity[88]. The descriptive phenomenological approach emphasizes validity determination[89] using lived experiences where the researcher will link the ideas with actual life events[90]. This research will use this method in determining the viability of information. Furthermore, the researcher will also use several sources to support a solid point, thus avoiding inaccurate literature.

3.4 Data Analysis Procedure

The researcher will use tables, numbers, and graphs to present quantitative data. Research validity tests will consider the relevance of qualitative data to the research topic. Therefore, some data collected will use quantitative analysis methods while others qualitative analysis.

3.5 Legal and Ethical Considerations

This research majorly implements thematic analysis as a qualitative research method of data collection[91]. The researcher will adhere to high standards of integrity as a mandatory requirement[92]. Therefore, this study will avoid academic misconducts such as ensuring no plagiarism, fabrication, or falsification[93][94]. The above misconduct can occur due to lack of academic, teaching and performance skills[95]. These issues are common among learners today[96] and they may arise if the supervisor[97] is not keen on academic misconducts and fail to pay attention and the carelessness is very dangerous[98].

Academic misconduct, especially plagiarized work and similarity index has been on the rise recently[99]. Students and their supervisors, therefore, have to be aware of the parameters and consequences of these actions. Furthermore, they have to ensure that all their work is original to avoid some harsh consequences[100]. This study will therefore ensure work originality and properly acknowledging contributions of external sources used. Misconduct can lead to serious consequences including legal actions and school punishments.

3.6 Conclusion

This research will adhere to all the aspects and parameters stipulated in this research methodology. The validity and success of this study dramatically depend on the methods of analysis. The best practices are therefore viable and necessary for this study. Furthermore, this study uses a mixed research method, thus covering the benefits of both the qualitative and quantitative methods.