CORPORATE LAW – Corporations Claiming Personhood and Fiduciary Duties
April 12, 2019
After 2 weeks away from teaching (spring break and a federal trial in Philadelphia), I was finally back in the classroom last night and had the pleasure of discussing the 2003 documentary “The Corporation” with my class. This documentary is based on Joel Bakan’s book “The Corporation: The Pathological Pursuit of Profit and Power” which charts the rise of institutions, explores the repercussions of corporation’s increasing preeminence and examines fiduciary duties owed among the various parties.
If you haven’t seen this documentary, this is a link to the film’s official websitehttps://thecorporation.com/film/about-film, and the full documentary can be seen here: https://www.youtube.com/watch?v=xHrhqtY2khc. When watching this documentary I encourage you to keep in mind:
(1) where loyalties lie in the corporate setting,
(2) who are owed fiduciary duties and
(3) the potential consequences for breaching such fiduciary duties.
Whenever I revisit this documentary, I find myself looking at legislation, or more specifically the lack thereof. There are very little regulations in place when it comes to encouraging corporate responsibility and limiting corporations’ political activities. Laws in this sector tend to focus on enforcing fiduciary duties. Naturally this begs the questions,should government play a role in promoting corporate morality and limiting corporate speech and expression by limiting political involvement?
I am of the belief that individual autonomy should always take precedence; however, in the case of corporations I do not believe “corporate autonomy” should take that same precedence. Corporations are afforded legal rights of personhood under the 14thAmendment and further empowered by controlling case law. While corporations do owe fiduciary duties to their shareholders, this is their only limitation.
A corporation is afforded all the rights of a natural person, without the background and complexities of a natural person. By the time an individual comes of age to enter contracts, participate in political activities, utilize the court systems etc… the individual would have a certain “moral gauge” as a result of their prior interactions and relationships with others in society.
Conversely there is no corporate “moral gauge” because a corporation is not a functional individual with a reasoning mind and decision-making capacity. Rather the corporation is a group of shareholders with an operating board of directors and officers whom owe a duty of loyalty to the corporation and the shareholders. As a corporation the end goal is profit and preservation of fiduciary duties.
If you have any questions or concerns as it relates to corporate governance, corporate misconduct or breach of fiduciary, we encourage you to reach out to one of our experienced corporate law attorneys at 619-432-5145.