The Company Law Review proposals published last week have raised fresh questions of stakeholder accountability. The new government set up the review to see whether ‘productive relationships with a range of parties over the longer term’ needed legal force. It recognised a progressive choice between ‘enlightened shareholder value’ and a director’s duty to balance shareholder interests with wider ones. The Labour government rejected the myth that large enterprises are ‘private’, or that their control, operations and administration are a matter of concern for shareholders only. These myths were protected by Cadbury, Hampel, Greenbury, Turnbull and others. Their constraints were challenged by the Company Law Review. We are all stakeholders in the performance of enterprises. Yet the idea of a ‘stakeholder’ forms no part of company law, accounting standards, corporate reporting or auditing practices. The laws prioritise the rights of equity investors over the rest of society. There are signs that public concern exists to make big business accountable and create stakeholder control. Social movements, such as Greenpeace, have forced the pace on the social accountability of corporations. Public concern about pensions mis-selling, railway accidents and excessive profiteering show the need to modernise corporate governance. Stakeholder rights must form the backbone of the new framework. This is the language of new, not old, Labour. Will the lobbying from traditional business interests dampen the purpose of the Review? A new company law framework built around the stakeholder concept will legitimise business activity. This will be the ground on which the progressive forces within new Labour will be tested. The style of the 20-F Report in the US must be adopted and experimentation with additional disclosures must begin. Pressure for change can only be revisited if the accountancy world joins the campaign for change. A watered down Review will increase demand for reform. In this, ‘forces of conservatism’ will be challenged.

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