A New Social Corporate Purpose: Stakeholders, Legitimate Expectations and Unfair Prejudice

This article explores a legal solution, via the legitimate expectations doctrine, to calls for reform of corporate purpose away from shareholder value maximisation and profits, towards more socially-orientated goals, in the form of social corporate purpose (SCP). Such a reform potentially facilitates more sustainable business operations, environmental protection, as well as business respect for human rights. The proposed legal solution amends UK law but would also be applicable to other jurisdictions that define corporate purpose as narrowly related to the shareholder. The proposed solution begins with the concept of legitimate expectations from UK law, developed in public law jurisprudence, but also present in UK company law, via the unfair prejudice action. It is argued that the unfair prejudice action, applicable to shareholders only, should be made available to all stakeholders. This extension can be justified with reference to the wider legitimate expectations doctrine in UK public law, on the basis that the underlying theoretical justifications for such legitimate expectations in public law also apply to the stakeholder-company relationship.