Wednesday, April 24, 2019
Home News "Companies must emerge as winners from the incentive of the legislator to...

"Companies must emerge as winners from the incentive of the legislator to find their raison d'être"

Subscribers article

"It is not because the activity of the company produces profits that they are enough to provide the meaning of the work that takes place there" (Photo: the Minister of the Economy Bruno Le Maire in Paris, the December 6).
"It is not because the activity of the company produces profits that they are enough to provide the meaning of the work that takes place there" (Photo: the Minister of the Economy Bruno Le Maire in Paris, the December 6). ERIC PIERMONT / AFP

Tribune. At the beginning of October, the Bill Pact (draft law on the growth and transformation of businesses), which includes a section relating to the corporate purpose of the company, was approved in first reading in the National Assembly, before his passage in the Senate in January 2019.

This theme, which came to light a few months ago with the publication of the Notat-Sénard report ("The company, object of collective interest", see PDF link), goes far beyond the only legislative debate. It is rooted in a fundamental reflection, which raises the question of the finality of the enterprise, and which responds to it otherwise than by purely financial considerations.

In a country like France, any modification of the civil code is an event. The Bill Pact, which includes among its one hundred and forty articles, the amendment of Articles 1833 and 1835 of the Civil Code on the purpose of the company and its statutes, will not escape the rule. But for this event to really date, two pitfalls must in our view be avoided.

The first pitfall is that of judicialization. What is it about ? By adding a paragraph to article 1833, which now provides that the management of a business is done taking into consideration "The social and environmental issues of its activity", the risk exists to transform corporate social responsibility (CSR) into a legal weapon that can be brandished against all business leaders who will be accused of not doing enough on this ground. How to determine who is doing enough?

Worry of business leaders

Hence their concern about this rewriting of the civil code, all the more legitimate as the wording adopted is very broad given the very nature of CSR. Therefore, the effect of this legislative amendment on leaders could simply be to encourage them to guard against the judicial risks of non-compliance with these requirements. Then would open the era of CSR with threats of trial … Which, we agree, does not pull anyone up.

The second danger is that of the "communication lacquer", if we are given the expression. Article 1835 of the Civil Code is in fact to be amended by adding the possibility, for the statutes of the company, to specify "The reason for which it wishes to acquire in carrying out its activity". The pitfall here is clearly identifiable, and already at work: it amounts to reducing CSR to elements of language for internal and external communication.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Must Read

WWE SmackDown Live results, recap, reactions (April 23, 2019): Trouble in Paradise

Welp. I doubt any of you got particularly good betting odds on this outcome, but feel free to cash in your tickets....

Musk called the likelihood of ignition of their cars: Markets: Economy: Lenta.ru

The founder of Tesla, Ilon Musk, declared on his page in Twitterthat the risk of ignition of its electric vehicles is 500 percent lower...

Democratic activists sentenced to prison terms | TIME ONLINE

Because of the mass protests in Hong Kong In 2014, prominent leaders of the Democracy Movement were sentenced to prison terms of up to...