Corporate Purpose

Is there such a thing? My opinion is, “yes”. And although those are some really nice cars parked at my club last weekend, they are NOT corporate purpose.

I admit to being prey to some cognitive bias here – post hoc ergo propter hoc . And lest you think I’m showing off my Latin, be assured that this came from one of the episodes of the very profane and clever TV series episode of West Wing Season 1. Since there is the recognized legal entity, there must therefore be a purpose for it.

Such an artificial construct – the incorporated company. Yet our Malaysian laws, derived from the creation of property rights and eventually the conferment of life-like attributes on an intangible concept through charter and later statutes of the English legal system, recognize companies and especially the public listed ones, with human characteristics. By comparison, in Islam the concept of “dhimmi” has never been extended to artificial or created life forms. Not even to the waqf, the Islamic foundation – another artificial concept. Notwithstanding, as in Malaysia, Saudi Arabian laws recognize the practicality of the limited liability company in assuring foreign investors that their property remains theirs.

Returning to the question at the beginning of this post – does a company have a purpose in life?

By implication, it must – for not only does a company have legal recognition as an entity, human purpose and activities breathe life through it. Thus corporate purpose must, by necessity, refer to the collective purpose of the company’s people.

What it should be though, depends on that collective’s worldview, and in my next post, I will refer to the laws of nature in giving us the various choices there are.

Location: Kuala Lumpur, Federal Territory of Kuala Lumpur, Malaysia

Comments

New comments are not allowed.

Popular posts from this blog

Doing Governance Better in 2024

Image
I caught up with an old friend recently, Dr Loh Leng Hua, who is a scholar in corporate governance. We talked about our favourite subject and the conversation led me to my own musings. Reflecting on the past seven years of my role as an independent board director, my approach to governance of companies has changed several times. I have learned a lot more through doing the work, being in the trenches , than by reading books and attending training sessions. No doubt, the academic learning is invaluable especially when I’m keeping up with the demands of the times and the vocation, but it is through the practice of governance that I have matured as a director. This next series of six mini articles reveals my current thoughts, and I invite you to be my partner in doing governance better. I look forward to hearing your views. Happy Year of the Dragon!
Read more

Risk Assessment: An essential tool for better decision-making

Image
By Tunku Alina and Anita Menon How familiar to you is the following scenario? It’s the start of the year, and the board has been booked for a strategy day. Slides decks have been shared but they were obviously rushed with many changes leading right up to the hour of the CEO’s briefing. Inevitably, an indepth description of the year ahead as part of a rolling 3-year midterm strategy, or a totally fresh 3-year plan is trotted out. The CEO gives an overview of the past year, high level aspirations for the coming year, and then the individual business heads would present their parts. There would be a passing comment on market and competitive landscape. Other than in the financial services sector, the Chief Risk Officer is rarely included. I have many times asked why the Risk Officer is not invited, or no formal risk assessment of the strategy or annual plan is given but it seems that this falls on deaf ears. I got my answer once, outside during an informal lunch with the board an...
Read more

The Value of Sustainability Initiatives

Image
I recently participated in a panel at the IVAS-IVSC conference on Valuation, the topic of discussion was how to value sustainability efforts. It was an interesting question that I had been mulling over since I first began my own sustainability journey. Value is subjective, much like beauty it is in the eyes of the beholder. So in valuing sustainability , one would have to determine who the valuation is for, and the scope thereof. One of the speakers also mentioned an added complexity, in that some companies have already incorporated sustainability into their strategy and thus teasing out the value of sustainability per se becomes tricky. In my work as a board director, over the past 18 months alone, I have come across at least 5 instances where sustainability has appeared as an intangible but powerful affect. Three would require valuation specialists, the other two, market forces. The first is in the acquisition of a listed company, and the allocation of price for the ...
Read more