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In essence, this principle means that the law should encourage long-termisim and regard for all stakeholders by director and that stakeholder interests should be pursued in an enlightened and inclusive way.
Quesion is that I don’t undersand the word’ termism and the phrase ‘ enlightened and inclusive way’
Could you please explain them for me, or give me some example to know properly this sentence?To explain long-termism, what it means is that the director should be concerned about the long-term for the company and not just the short-term. For example, if directors are paid a big bonus based on this years profits, then they will be encouraged to make a big profit this year even if that means that profits will suffer in later years (because if they get a big bonus this year they can leave and not worry if it loses money in the future). They should be thinking about what is best for the company in the long-term.
With regard to ‘enlightened and inclusive’, enlightened means that directors should understand the implications of what they do, inclusive means that they should be concerned about everyone affected – employees, shareholders, lenders etc..
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