Publications & Thought Leadership
Bringing Corporate Purpose into the Mainstream: Directions for Canadian Law
Posted in Leadership Strategies
Coro was a lead editor of this paper written by Iseoluwa Akintunde and Richard Janda, two Canadian legal scholars from the McGill University Faculty of Law. The following is taken from the Executive Summary of the report.
“Bringing Corporate Purpose into the Mainstream: Directions for Canadian Law” seeks to advance the Canadian discussion of corporate purpose and to argue in favour of establishing a more solid legal scaffolding for it through reform of the Canada Business Corporations Act. “Bringing Corporate Purpose into the Mainstream: Directions for Canadian Law” begins by reviewing different approaches to the definition of “corporate purpose” and settles on the following: the reason for existence guiding a company’s business conduct. The authors deliberately adopt a broad rather than narrower social definition of purpose and suggest, based on recent experience in the U.K., that nudging companies toward social purpose by having them state, and publicly defend, a purpose they have leeway to define is more likely to produce truly socially beneficial companies than the attempt to impose a legal obligation to identify a social purpose.
“Bringing Corporate Purpose into the Mainstream: Directions for Canadian Law” then delves briefly into legal history to show that, far from being inconsistent with corporate law, identifying a purpose for incorporation was in fact at its origins.
“Bringing Corporate Purpose into the Mainstream: Directions for Canadian Law” reviews recent developments in Canadian law, which have freed directors and officers to take account of social and environmental considerations when exercising their fiduciary duties. However, this discretion also gives them power to avoid taking such considerations into account. In sum, the Canada Business Corporations Act does not currently provide a firm foundation for corporate purpose that is not shareholder-centric.
A large part of the paper is then devoted to tracking recent developments in the U.K. and France, both of which have gone further in providing a legal framework for corporate purpose. The authors draw on a number of features of U.K. and French law, as well as on some existing proposals for reform to U.K. law, to arrive at five recommendations for reform to the Canada Business Corporations Act.