In December of 2018 a potentially transformative event occurred within UK corporate law and governance with the coming into force of the Revised Corporate Governance Code and its requirement that ‘the board should establish the company’s purpose’. This article explores how the Code’s references to ‘company purpose’ should best be understood, arguing, through a process of elimination, that it is an animated mission-purpose idea about what the company does; an animated idea that can both transform the nature of corporate life and offer pathways to value generation unavailable to non-purposeful companies. But in embracing purpose the Code invites the question: does the UK offer companies the legal and non-legal conditions to support and nurture purposeful companies? The article argues that although UK company law is theoretically capable of providing a purposeful legal ecology it is prevented from doing so by a constraining legal normality which is supported by, inter alia, investor inertia arising from the incentive structures of modern investment vehicles and the stickiness of default rules. Such practical barriers mean that legal reforms are required to enable company purpose to evolve into a meaningful concept, rather than an empty phrase. The article explores the nature of such reforms and the possible theoretical and empirical objections to them, which it rejects.'The Rise and Fall (?) of the Berle-Means Corporation' by Brian R. Cheffins in (2019) Seattle University Law Review (Forthcoming) comments
This paper forms part of the proceedings of the 10th Annual Berle Symposium (2018), which focused on Adolf Berle and the world he influenced. He and Gardiner Means documented in The Modern Corporation and Private Property (1932) what they said was a separation of ownership and control in major American business enterprises. Berle and Means became sufficiently closely associated with the separation of ownership and control pattern for the large American public firm to be christened subsequently “the Berle-Means corporation”. This paper focuses on the “rise” of the Berle-Means corporation, considering in so doing why ownership became divorced from control in most of America’s biggest companies. It also assesses whether developments concerning institutional investors and shareholder activism have precipitated the “fall” of the Berle-Means corporation, meaning U.S. corporate governance is no longer characterized by a separation of ownership and control.