Company Law

Industry More Content, Finance Less Proud

Dr Mark Hayes worked with Clifford Longley and representatives of the Blueprint for a Better Business, the Common Good Foundation and CAFOD, to take another look at Company Law reform in the light of Catholic Social Thought.

The central idea is to draw on Catholic Social Thought to make the moral claim that workers enjoy a natural property right in the business of a company, that they possess an inalienable membership, just as their property in themselves has become inalienable since the abolition of slavery. The modern company is in its legal structure a poor reflection of the human association that produces goods and services and serves customers and society. Part of the job is to articulate clearly the implications for Company Law of recognising such a property right within mainstream companies (as opposed to worker co-ops, charities, etc).

Key elements are:

  • Making a clear distinction between the company itself (a legal construct) and its business, for the purpose of defining the ‘success’ that directors have a duty to promote

  • Defining qualifying employees as members of a company that employs them

  • Making parent companies liable for their subsidiaries

  • Prohibiting hostile takeovers and requiring employee consent by ballot to takeovers recommended by the directors

  • Prohibiting further demutualisation and encouraging conversion to co-operative and mutual forms of incorporation

While this proposal will appear to some too radical, to others too conservative, Dr Hayes argues that it represents a feasible incremental route towards a more inclusive capitalism. After two meetings in April and June, the project Steering Group published an interim working paper with the title 'Redefining Corporate Purpose: The Need To Recognise Membership Through Work' in order to submit this as evidence to the consultation on The Purposeful Company Report organised by the Big Innovation Centre.