Shareholder Importance in Corporate Activity - Discussion Paper
19 November 2014 at 11:41 am
A new Australian Discussion Paper by the Governance Institute explores the means by which society’s expectations in relation to moderating the influence of corporate activity on the community and environment can best be met.
The Paper says that despite the prevalence of the use of the term social licence to operate, the law does not contain an explicit statement of either the societal purpose of companies or what the interests of the corporation are.
“Governance Institute’s mission to promote and advance the effective governance of organisations in the private and public sectors,” National Director, Policy & Publishing Governance Institute of Australia, Judith Fox said.
“A strong governance framework facilitates a strong economy.
“We established a panel of pre-eminent industry experts, the Governance Advisory Panel, with the objective of fostering frank and robust discussion about the future of governance and what could be done to drive improvements in policy and practice.
“In 2013 the Panel recommended that Governance Institute should explore with stakeholders the issue of shareholder primacy, to assess how the shareholder primacy rule should be positioned in the 21st century and if greater certainty needs to be introduced to the operation of the law in this regard.
“We have issued the discussion paper to provide a framework for discussion and stimulate debate about whether shareholder primacy should be retained or stakeholder interests become equally privileged.
“The discussion paper, Shareholder primacy: Is there a need for change?, examines the misalignment that is often experienced between societal expectation and the impact of corporate activity.
“The paper queries whether the explicit objectives of a company should be solely about shareholders; whether the current law constrains a broader view of the best interests of the company; whether a wider view in law is required; and whether greater certainty is required as to the operation of the law in regard to shareholder primacy.”
Submissions close on 5 December 2014. Go to governanceinstitute.com.au