The recent release of a new ‘Statement on the Purpose of a Corporation’ by the US Business Roundtable signed by 181 CEOs, who have committed to lead their companies for the benefit of all stakeholders – customers, employees, suppliers, communities and shareholders – have reignited the Berle-Dodd debate about whether companies should be accountable to their shareholders or wider stakeholders. This follows similar 2018 corporate governance reforms in the UK, Australia and Singapore. Such reforms appear to denote a shift from a corporate governance model based upon ‘shareholder primacy’ to one that is more stakeholder-oriented. A closer examination, however, would reveal different regulatory approaches adopted by each jurisdiction with respect to resolving the agency costs between the company and its various constituencies.
Drawing primarily on the experiences of the US, UK, Australia and Singapore, this paper provides a comparative overview of the regulatory developments in these jurisdictions to ascertain how each jurisdiction is moving towards an ‘enlightened shareholder value’ model in respect of the extent to which directors are required to take into account the interests of the company’s stakeholders in corporate decision-making. It discusses the implications of these developments with respect to the potential for convergence towards a new common law ‘enlightened shareholder value’ model. In this respect, it is argued that we are witnessing the start of a nascent shift toward a new corporate form(s) which reflects varying ‘degrees’ of stakeholder orientation along a spectrum bookended by the ‘shareholder primacy’ model on one end, which represents the leitmotif in the common law at least until recently, and the ‘shareholder enlightened value’ model on the other. On this basis, this challenges the notion of the end of history that had suggested the triumph of the ‘shareholder primacy’ model as the standard normative corporate form.