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  • 2 - Shareholder Voice and Corporate Purpose

  • Edited by Luca Enriques, University of Oxford, Giovanni Strampelli, Università Commerciale Luigi Bocconi, Milan
  • Book:
    Board-Shareholder Dialogue
    Published online:
    31 August 2024
    Print publication:
    07 November 2024, pp 46-90

  • Summary

    In "Prosperity," Professor Colin Mayer proposes a corporate law change, advocating for social goals in company constitutions. The chapter, however, argues this requires more than a legal tweak. Analyzing two cases, it suggests shareholders resisting profit restrictions under Friedman’s principle pose challenges. Insights from French corporate statements, US reactions to Public Benefit Corporation proposals, and UK companies’ responses reveal hurdles. Proposed solutions include reducing shareholder powers or court-specified purposes. In the second case, exploring investors prioritizing non-financial goals, the chapter considers Environmental, Social, and Governance (ESG) investing. Despite alignment potential, current ESG falls short. Uncertainty surrounds its future. If successful, the chapter contends existing corporate law can accommodate goals without a mandatory purpose. In summary, it suggests the mandatory purpose requirement may be ineffective in the first case or largely unnecessary in the second, highlighting the complexities in reshaping corporate conduct.