A constituency statute is a term in US corporate law for a rule that requires a board of directors to pay regard to the interests of all corporate stakeholders in their decision making. A constituency statute is intended to give directors of corporations the discretion to balance the interests of stakeholders, rather than have to solely focus on maximizing shareholder value in a way that could damage the long-term sustainability of the enterprise.
State laws In 1991, 28 states were recorded as having constituency statutes.C Hansen, 'Other Constituency Statutes: A Search for Perspective' (1991) 46(4) The Business Lawyer 1355, Appendix A for a list of laws. Professor Charles Hansen recorded the following:
See also US corporate law Accountable Capitalism Act
Notes
References Charles Hansen, 'Other Constituency Statutes: A Search for Perspective' (1991) 46(4) The Business Lawyer 1355 EW Orts, 'Beyond shareholders: Interpreting corporate constituency statute' (1992) 61 Geo. Wash. L. Rev 14