Profit creation, intra and inter-generational equity: Need for new company law

摘要

The issue of profits in company management is as old as the joint stock company but remains ever topical and somewhat controversial. Accountants have one measure for profit and economists another measure, whilst some others want to do away with the idea of profits entirely to ensure social responsibility by companies. The theory of sustainability calls into question the existing theory of profits, apparently based on subsidization and negative externalities, as a result of its failure to factor into company accounts their true environmental costs.? Not only does the principle of sustainability appear to validate stakeholders’ rights in corporate profits but it also calls into question the current theories of profit creation and distributional equity based on shareholder theory, as well as existing company laws. This paper examines the relevant issues and argues that new legal rules on corporate accounting and profits reflecting generational equity, rather than reliance on voluntary compliance, are imperative for good corporate governance and sustainable development.