Corporate Accountability

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For 400 years, directors of British companies have worked for a company's shareholders. That will change if a proposed 780-page bill becomes law. That bill mandates that "A director must (so far as reasonably practicable) have regard to the likely consequences of any decision in the long term, the interests of the company's employees, the need to foster the company's business relationships with suppliers, customers and others, the impact of the company's operations on the community and the environment." Many business leaders and corporate lawyers say that would make directors answerable to other "stakeholders"—employees, environmentalists, political activists— whose interests may conflict with those of shareholders or other stakeholders. And the bill doesn't even create a hierarchy to direct directors whose interests take precedence. They say the bill will bring board decisionmaking to a halt and discourage people from becoming directors.