Redefining Corporate Purpose: An International Perspective

This comparative analysis of India’s move toward redefining corporate purpose proceeds as follow. Part I presents an overview of global debates over corporate purpose, drawing principally from the move toward the ESV model in the U.K. and benefit corporations in the U.S. This section briefly recounts the debates in both jurisdictions about whether the changes they have experienced will engender more socially responsible corporations. Part II then provides a condensed history of corporate law reforms in India and an overview of the legislative changes undertaken in the past decade. In Part II, this Article takes a broad approach toward analyzing the Act and argues that the various provisions of the Act demonstrate a move toward broader corporate purpose. In Part III, this Article argues that despite the goals of Indian law makers in passing the Companies Act, there are serious shortcomings in the law as it pushes toward a pluralistic stakeholder oriented purpose. Part III identifies several structural challenges that stand in the way of a move toward companies that truly are responsible to a wide variety of constituencies, including vagueness in the legislation, promoter-dominated ownership structures, ineffective institutional framework to support enforcement efforts by stakeholders generally, and weaknesses in the judiciary. These challenges suggest that India’s experiment with corporate purpose is one that is uncertain to succeed.