WHAT IS A CORPORATION?

Corporation: a “specific legal form of organization of persons and material resources, chartered by the state, for the purpose of conducting business”

 

Corporate law

- Creates a governing body to manage the corporation–usually a board of directors

Chief Executive Officer (CEO) is hired by the board of directors to manage the corporation in its day-to-day affairs

- Dictates the duties of those directors - to operate in the interests of shareholders who own the corporation

This is their fiduciary duty
The interests of the shareholders is understood to be making money for them, i.e., producing dividends and/or increasing the value of their shares

The shareholders can sue the board if the corporation fails to adequately pursue their interests, i.e., fulfill their fiduciary duty
Note: the failure to produce a profit is not in and of itself legally actionable

- Casts ethical and social concerns as irrelevant, or as stumbling blocks to the corporation’s fundamental mandate

- Leads corporations to actively disregard harm to all interests other than those of shareholders

 

U.S. corporations are legal “persons”

- They can sue and be sued

- They are afforded rights, e.g., due process, 1^st amendment, etc.

- Historically, this is a relatively recent development

        Note the fluidity of law