The article in the url link below summarizes the history of the corporate charter and the public-interest demands placed on organizations that sought both the privilege and responsibility of incorporation (Issues: Corporate Charters, p106; Corporation, p116):
“While history does not support the claim of a golden age when corporations came into being to serve a “public purpose”, it does not prevent society from imposing one now.”
I understand the principle of advocating for firms to align themselves publicly with a commitment to serve “a stated public purpose”:
“A charter, like today’s articles of incorporation, brought a corporation into existence. Lawyers still commonly refer to articles as charters, their historical antecedent. The charter – then and now – invariably has a “purpose” clause, a statement of why the company is coming into existence.”
I question, however, what purpose this requirement will serve in practice. Greater transparency will help hold firms accountable for their commitments, but, by definition, a statement in a founding document to serve the “public purpose” is likely to be broad in sweep and short on specifics. Imposing the need for such a statement of purpose on corporations, as advocated by the author, seems only to revive the deception and corruption of the principle, which, as the article reveals, occurred historically in centuries past:
“… to the extent one could conjure up a public benefit for the new corporation, it would justify the granting of special powers, usually a local monopoly on a particular business. Hence, the Hudson Bay Company’s lock on commerce in vast swaths of colonial Canada. The earliest, recognisably modern business corporation was the famous – or infamous – East India Company. Chartered on 31 December, 1600, its public purpose – “the advancement of trade” – was in fact nothing more glorious than the making of money for its proprietors.”
Take care
Dave
Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther/
Public purpose – Corporate history’s lesson for companies now
While there is much about the history of corporate legislation that remains murky, companies should revive the requirement for a stated public purpose, says Peter Kinder
Ethical Corporation Magazine
June 18, 2007
http://www.ethicalcorp.com/content.asp?ContentID=5406
