Abstract
A recent French reform has revised the legal definition of the corporation. In essence, the law stipulates that the corporation must be run with due regard to the social and environmental impacts of its activity. It also introduces the notion of raison d’être and affords the possibility for any corporation to assign social or environmental purposes to itself, defined in its by-laws. This reform is similar to recent reforms in the UK and the US, but is based on an original and distinctive theoretical argument. The aim of our article is to analyze the fundamental tenets of this reform and their implications for the theory of the corporation. It shows that the new law is based on a new positive definition of the enterprise as not only an economic organization or a productive entity, but more fundamentally a space for innovative collective action. We argue that this view of the enterprise challenges our conceptualization of the corporation in two important ways. First, it shows that the traditional theories overlook the activities of the enterprise and their related impacts, and that the corporation is not necessarily the appropriate legal vehicle for the innovative enterprise. Second, it suggests that the stipulation of the enterprise’s purpose or raison d’être in the corporate by-laws can provide new promising legal foundations for corporate responsibility.
Highlights
Keywords Corporate law · Corporate responsibility · Purpose-driven corporation In May 2019, the French parliament passed a new law revising the definition of a corporation, especially the treatment of corporate purpose
1 Mines ParisTech, PSL Research University, Centre de Gestion Scientifique (CGS), i3 UMR CNRS, 60 boulevard Saint Michel, 75006 Paris, France. This reform is a part of an international movement that started a few years ago, in particular with the introduction of new corporate forms, such as Benefit Corporations (BCs), which have been written into the laws of 33 American states (André 2012; Hiller 2013; Hemphill and Cullari 2014)
The aim of the article is to answer the following questions. Why is it that distinguishing the enterprise from the corporation is so important and what are the fundamental tenets underpinning the amendment of the articles defining the corporation in the Civil Code, which had remained practically unchanged since 1804? Second, what are the theoretical implications of these arguments and to what extent do they challenge or enrich our views of the corporation?
Summary
In May 2019, the French parliament passed a new law revising the definition of a corporation, especially the treatment of corporate purpose. While various institutional reports have been produced over the past years on the topic of reforming corporate purpose, the Notat-Senard Report directly inspired the final text of the law and was the main reference both in the parliamentary debates and in the press It offered a detailed analysis of the issues, with sound arguments and evidence, and played a decisive role by synthesizing previous research and directly informing the government’s draft bill. This singular organization was productive and commercial and creative: its purpose was to produce existing goods, and to develop new goods and services, and to create new technologies, and new competencies, jobs and methods
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