STAKEHOLDERS INTEGRATION IN CORPORATE LAW: THE CURRENT DEBATE IN FRANCE
In July 2018, the French government is expected to present to parliament a bill of law called PACTE (Plan d’Action pour la Croissance et la Transformation des Entreprises). Among the numerous measures under review is an attempt to integrate stakeholder interests into corporate law. As a result, much debate has been triggered among French businesses and institutions.
The measures follow other advanced countries which have moved toward accepting purpose rather than profit as a corporate ideal – as the low-profit limited liability company, the benefit corporation, the flexible/social purpose corporation in the US and the community interest company in the UK illustrate. At the same time, France also intends to rewrite its legal codes.
The status quo is no longer an option. There is a need for integration of corporate governance into French law in order to reflect a more holistic view. This is a new philosophy to be introduced into French law. That said, the current proposals may be inadequate.
Status quo no longer an option
In order to improve corporate governance in France, and in the wake of the European Directive on corporate governance for listed companies and for financial companies, rules have been introduced by several private codes – such as the Association Française des Entreprises Privées (AFEP), the Mouvement des Entreprises de France (MEDEF) and Middlenext – on a free-will and comply or explain basis. Of course, these mechanisms still speak in favour of soft law.
Nevertheless, because recommendations were not integrated into corporate law, it was possible for a corporation to reference the codes, without actually respecting them. Being unsanctioned, the courts did not give the codes any legal force, considering them to be general affirmations and not binding conventions.
Jul-Sep 2018 Issue
Finance & Gouvernance