New trends in legal frameworks for purpose‐driven companies—The European way(s)

Abstract

The debate on corporate governance of business companies and the discussions on the concept of corporate purpose intensified. Looking at the role of law in ensuring that businesses profit from creating benefits and not from creating detriments, it is worth distinguishing between interventions designed to incentivise the former (e.g., mandatory rules on sustainability disclosure or new dual‐purpose companies) and disincentivise the latter (tort or recent supply chain due diligence laws). Nevertheless, the existence of a grey area for activities that do not materialise in tort, or the violation of other mandatory rules cannot be denied and is probably where the reconceptualisation of fiduciary duties can mediate. New legal trends in these areas are mapped with a special focus on the European context and some comparative law considerations with respect to the United Kingdom and the United States. Finally, a suggestion for the future of European harmonisation on dual‐purpose companies will be offered.

Profit‐with‐purpose corporations: Why purpose needs law and why it matters for management

“…The growing variety of forms of corporations calls for comparative assessment to inform future frameworks for corporate law in Europe and elsewhere. The essay by Livia Ventura (2023, this dialog) is a useful step in that direction. There is a spectrum of alternatives, ranging from the straightforward inclusion of a purpose in the corporate constitution, to the more intricate French model, which involves a mission committee and an external review, as well as benefit corporations which necessitate self‐assessment based on third‐party assessment framework.…”

“…For instance, the tort or the delict is an unlawful act, and the injured party has the right to seek compensation from the person responsible for the harm. Or what is considered “bad” is not defined—we are in the “grey area” mentioned by Livia Ventura (Ventura, 2023, this dialog)—and everyone may have a different interpretation. In this case, leaving it to the company, and to the board in particular, to define what is a problem or a solution is likely to be ineffective as long as the governance structure remains unchanged.…”