Elisabeth de Fontenay is Associate Professor at Duke University School of Law. This post is based on her article, recently published in the Harvard Business Law Review.
What is a corporation? The field of corporate law is riven with competing visions of the corporate form. The task of defining the corporation is particularly challenging today, when the state has largely ceded to private parties the task of establishing rights and duties among the corporation and its various stakeholders. Under this “contractarian” approach, the primary function of corporate statutes and the common law of corporations is not regulation, but rather helping parties set their own terms for the corporate endeavor. As a result, today’s corporation is a protean vehicle, able to accommodate a wide range of activities and on a wide scale.
Given its many competing visions, it is perhaps easier to clarify what the corporation is by finding agreement over what the corporation is not. My recent article, Individual Autonomy in Corporate Law, seeks to do precisely that. It explores two relatively recent developments in corporate law that have generated considerable criticism from corporate law scholars. The first is the Supreme Court’s recognition of corporate religious rights in Burwell v. Hobby Lobby Stores, Inc. The second is the Nevada legislature’s decision to eliminate management’s mandatory fiduciary duties to the corporation. Despite their obvious differences, there is a common thread between them. Both can be interpreted at least in part as efforts to expand individual rights or autonomy of a particular corporate constituency—shareholders in the case of Hobby Lobby, and management in the case of Nevada corporate law. Both reflect the political or philosophical stance that, even within a vehicle designed to constrain individual behavior and voice ex ante, a particular space should be preserved for individual rights and autonomy ex post.
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