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Dr Manuel Jose Oyson
CQUniversity Australia

The ASX Corporate Governance Council recently consulted on proposals to revise principle 3 of the ASX Corporate Governance Principles and Recommendations (CGPR) in order to recognise the “fundamental importance of a listed entity’s social licence to operate” and the need for it to act in lawful, ethical and socially responsible manner to preserve that licence. However, because of strong opposition, this proposal was eventually abandoned in the 4th edition of the CGPR. Apparently, such a radical proposal could potentially overturn orthodox governance principles of shareholder primacy enshrined both in the common law and in statutes.

The idea behind the proposal though remains relevant for government business enterprises (GBEs) which have generally operated in pursuit of strong financial returns. In this regard, GBEs operate like most for-profit businesses and are focused on maximising shareholder wealth. However, whilst the primacy of shareholder interests in for-profit businesses is conventionally supported by corporate governance, a limited regard for GBE non-shareholder stakeholder interests arguably is normatively inappropriate. Governments even in capitalist societies have never operated in pursuit of financial returns. Hence, a stakeholder theory approach in the operations of GBEs appears normatively appropriate.

Using a socio-legal and normative approach, this paper examines the philosophical theories of utilitarianism, social justice, social contract, legitimacy, and positivism in order to highlight the impropriety of the shareholder primacy and the importance of stakeholder theory in GBEs. It argues that GBEs should normatively recognise the importance of having a social licence to operate and their duty towards non-shareholder stakeholders.

Dr. Oyson is a Law Lecturer at CQUniversity Australia. He is a Lawyer in Queensland and in the Philippines, and a Barrister and Solicitor in New Zealand. He completed his PhD, Master of Laws (with Honours), and PG Certificate in Academic Practice at the University of Auckland. He has published in the: Journal of International Entrepreneurship, Journal of International Globalisation and Small Business, The Law Teacher, and Small Enterprise Research Journal, among others, and presented papers at more than 15 international conferences in the UK, U.S., Canada, the Netherlands, Germany, Serbia, Singapore, and Australia.

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