Directors' duties, CSR and the JobKeeper wage subsidy scheme

Directors' duties, CSR and the JobKeeper wage subsidy scheme

This article contributes to the ongoing debate regarding the construction of directors’ duties to act in the best interests of the corporation and their relationship to corporate social responsibility (‘CSR’) and related concepts. It begins by revisiting the neoliberal ideas underpinning the nexus of contracts theory of the corporation as the root of shareholder primacy in Anglo-American corporate governance. Asking whether these theorisations are appropriate in the Australian context and canvassing the evolving interpretation of directors’ duties, this article argues that Australia can still reasonably be said to be a shareholder primacy jurisdiction. Stakeholders’ interests and CSR considerations might be permissible factors in directors’ decision-making, but only derivatively to the interests of shareholders. Using corporate profiteering from the JobKeeper wage subsidy scheme as a case study, this article argues that the outcomes for which the scheme was criticised, and the response of directors to demands to repay unneeded subsidies, are consistent with and legitimated by theory, law and governance principles which maintain shareholder primacy and which might permit but neither compel nor meaningfully encourage socially responsible corporate behaviour. is analysis highlights not only the importance of designing ‘the rules of the game’ to prevent their (lawful) exploitation by corporations, but also the limited effectiveness of our current voluntaristic CSR regime in delivering more conscientious corporate behaviour beyond mere compliance with law.