I should be studying for exams or writing papers, but I saw this on LinkedIn this morning and immediately thought of biz orgs: NEWS OF THE WEEK! I also want to point out that the Elon Musk Twitter (sorry, X*) post indicated in the screenshot is FAKE NEWS, a completely fabricated/doctored X post, but this Simon Potter lawyer guy is real.
I note the relevant statute: Canada Business Corporations Act, RSC 1985, c C-44.
Duty of care of directors and officers – s. 122(1)(a): Every director and officer of a corporation in exercising their powers and discharging their duties shall act honestly and in good faith with a view to the best interests of the corporation.
Does this statutory provision translate to the sentiment that directors of a company or a board owe a duty to “maximize profits, no matter how ruthlessly,” to its shareholders? I think not. Are corporations still evil? Big time.
While the legal affection of Canadian corporate law is still aimed nearly exclusively towards the benefit and profitability of the corporation as well as the prioritization of controlling shareholders’ interests, courts have recognized ethical and equitable considerations and have created mechanisms to address, avoid, and provide relief for exploitative or oppressive harm where appropriate. However, corporate law inherently serves to protect the interests of the corporation over those of society. In my view, this is to be expected.
It is only natural for these values reflected in the law to be aligned with those of the industry. Unfortunately, this implies that corporate law, in its current state, serves as a vehicle that enables corporations, such as insurance companies, to operate and conduct business despite having detrimental social, political, or environmental impacts. The only way I see this status quo changing is if the law develops to further promote corporate social responsibility (to strengthen legal and moral obligations to society and the environment in addition to preserving the interests of shareholders) and reconsider the extent of corporate personhood rights (to check and limit corporate power).
Perhaps then there would be fewer cases of “radical lefts” (as fake Elon Musk puts it) taking matters into their own hands to limit corporate power and hold corporations responsible, in their own way, outside of the justice system. Shoot first, ethics later?
Corporate law may be evil and ruthless, but no less than culpable homicide.
But what do I know, and who am I to say where the trajectory of corporate law should be headed? I am just here for fun and learning.
Thank you, and see you all on Saturday bright ‘n’ early!
Hunter Lang
Hi Hunter, great post!!
I’ve also been following this story along as it’s been unfolding. Now that a suspect has been apprehended (and even before that), I think it’s been pretty interesting, but rather not at all surprising, to see how sympathetic most people have been toward the suspect. Particularly contrasted with how, as you’ve noted, others including Elon Musk have reacted. NPR recently did a podcast discussing these polarizing reactions, and I think it’s a good listen: https://www.npr.org/transcripts/1219032782
I agree with your point about changing the status quo and encouraging corporations to take on more social responsibility and obligations toward society but (kind of pessimistically) it reminds me of Professor Bakan’s Corporate Moral Lack article and how, in practice, the new corporation promotes “corporate conscientiousness” as a means to promote their capital interests rather than truly have a moral and democratic effect on society through actions. But change does have to start somewhere!
Hi Hunter,
Great post! I was particularly taken by your line “the only way I see this status quo changing is if the law develops to further promote corporate social responsibility (to strengthen legal and moral obligations to society and the environment in addition to preserving the interests of shareholders) and reconsider the extent of corporate personhood rights (to check and limit corporate power).” It resonated with me since I wrote my research paper on the incorporation of corporate social responsibility into the role of a director. I found there are budding legislations in other countries like France and Australia that mandate corporations to include environmental and social initiatives into their strategy. However, North America is sadly lagging behind at the moment. Hopefully, the global market begins to influence North American policy-makers and they begin to ratify legislation that encourages companies to promote corporate social responsibility.