Corporate Social Responsibility and Shareholder Primacy – Delaware and Taiwan

by Delaware Corporate and Commercial Litigation Blog, December 5th, 2010.

At the Taiwan Corporate Governance Association’s Corporate Governance Summit in Taipei on December 3, 2010, Delaware Supreme Court Justice Randy J. Holland gave the keynote speech entitled “Corporate Social Responsibility, Shareholders and Stakeholders.”  The focus of this year’s Summit is the development of Taiwan’s approach to corporate social responsibility (“CSR”) issues and the relationship between CSR and the prospect of sustainable and responsible investment by the public as shareholders.  Justice Holland spoke about relevant corporate governance issues and judicial decisions regarding CSR in the United States in general and Delaware in particular and how that relates to the current environment in Taiwan.

Kevin F. Brady of Connolly Bove Lodge & Hutz LLP submitted this report from Taipei on Justice Holland’s speech.  Kevin was part of the Delaware delegation in Taiwan who were participating in conferences and seminars on Delaware corporate law in conjunction with the Summit.

Justice Holland noted that the origin of CSR in the United States is the 1932 debate published in the Harvard Law Review between Adolph A. Berle and Professor Merrick Dodd.  Berle argued for the shareholder primacy theory which states that the corporation exists to make money for shareholders ( a hat tip here to Professor Gordon Smith’s 1998 article The Shareholder Primacy Norm, 23 J. Corp. L. 277 which Justice Holland cited).  Berle’s theory was that “all powers granted to a corporation or the management of a corporation are necessarily and at all times exercisable only for the ratable benefit of all the shareholders as their interest appears.” (continue reading… )


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