The current discussions, around the world, and in particular in France, on how the fate of companies is sealed, illustrates the view that old capitalism, the one in which those who hold capital grant or deny the breath of life to companies, is outdated.
Shareholders do still have an absolute right to decide alone the fate of companies, both in the new companies (where providing added value is almost never undertaken by the capital providers) and in the older companies (where often the holders of capital remain so only for a few minutes, or even less, with high-frequency trading).
Indeed, they actually are no longer anything more than short-term owners of shares issued by companies; but not the only stakeholders of their destiny.
It is clear that a company today does not serve the interests of its shareholders alone: those of its staff also, its consumers, its environment, the areas in which it operates, the young people it educates or could educate, and even the next generations.
In France, for example, irrespective of the legal form of the business (from SA -- Société anonyme -- a publicly traded company to an agricultural cooperative, and a mutual insurance company), the essential characteristics of corporate existence fall within the definition of "general partnership" defined by Article 1832 and seq. of the French Civil Code. Article 1832 states that a "company" shall be formed by « two or more persons? "who" agree by contract to appropriate their assets or industry to a common undertaking with a view to sharing in the profits or benefiting from any savings that may arise." Article 1833 specifies that "every partnership must be formed for an object which is legal, and be entered into for the common benefit of the parties thereto." Of the partners only. And in fact, of the sole holders of the capital of companies (in reference to all these aspects see the report For a Positive Economy and in particular Chapter 6).
These articles are completely outdated. On the one hand, "two or several persons" in a company may no longer be defined as those who "appropriate their assets or industry." Does it refer to shareholders? Lenders? Company directors? Senior executives? Patent owners? All the employees themselves? On the other hand, a company can no longer be considered to be constituted for the benefit of the "partners" only; because many other stakeholders are recognized today.
Therefore the law needs to be adjusted to reflect the plurality of interests at hand; it ought to distinguish between "partners" and "concerned users": "partners" bring in capital and ideas, to launch a project to the service of "concerned users," with whom they have to share the benefits from their activities.
Such changes may seem revolutionary. Actually they are fashionable at the moment. Many new entrepreneurs have such thoughts of their activity, whether social and solidarity-based enterprises, or NGOs, or "social business" and even commercial companies. This is also the case, as a matter of law, in one way or another, in some countries, notably in California, USA.
In the case of France, Article 1832 of the Civil Code should be rephrased to read as: "A company shall be formed by two or more persons who agree by contract to appropriate their assets or industry, to a common undertaking with a view to sharing among themselves and with other entities concerned (consumers, young people in training, territories, environment, future generations) the profits or benefiting from any savings that may arise." And Article 1833 should read as follows: "every partnership must be formed for an object which is legal, and be entered into and managed by the partners for the plural benefit of the parties thereto and the other entities concerned. The voting rights of each partner shall be all the more important as he supports in a sustainable manner the company through his capital or work."
If such changes were to be implemented, boards of directors would be constituted in a different way; they would have quite a different task; and often their decisions would be quite different. There would still be a need to reform, looking in this direction, the works councils.
Now, if members of the French Parliament actually wanted to make a lasting and significant change to this country, they would dare to implement this revolution, instead of arguing loudly about the line thickness of unavoidable budgetary constraints.