Management Renewal? Consequences of the Current Evolutions of the 'Best Interests of the Corporation' in North American and French Corporate Law

Abstract

The concept of the stakeholder can be integrated into corporate law through a broad interpretation of the idea of the interests of the corporation. In this paper, I address criticisms of the classic definition of the principal purpose of a firm. Even if U.S. law is less interventionist and more ambiguous than French law in this domain, it is still possible to put forward a broad interpretation of the interests of the for the USA. The interests of Canadian and French firms include their stakeholders. While the notion of interest is debatable in France, Canada has recently modified its stance regarding the purpose of the firm. Besides recent decision BCE Inc. v. 1976 Debentureholders, the decision of the Canadian Supreme Court Magasins a rayons Peoples Inc. (Syndic de) v. Wise in 2004 was a crucial step in the best interests of the corporation definition. With respect to fiduciary duties, this ruling set aside the traditional interpretation of the best interests of the corporation which gives primacy to shareholders' interests. The Court held that the expression best interests of the corporation refers to the maximization of the corporation's value. This innovative vision of the interest of the introduces stakeholder theory and corporate social responsibility (CSR) into corporate law and provides a new frame for management responsibilities. The legal system imposes in fine on the managers to orient their corporations in socially behavior way and to exercise their power on behalf of the corporation's constituents: shareholders, workers, suppliers and communities in which these corporations thrive. As a result, this paper concludes with an extended discussion of the implications for the future of research in management, corporate law, economics and finance.