Persons, Things and Corporations: The Corporate Personality Controversy and Comparative Corporate Governance

Abstract

The present article is a fresh attempt to ‘end’ the age-old controversy over the nature of corporate personality. The key to this attempt is an observation that an incorporated firm is composed of not one but, "two," ownership relations: Shareholders own the corporation and the corporation in turn owns corporate assets. The corporation thus plays the dual role of a, "person," and a, "thing," in the system of law. This article then shows how this person/thing duality of corporation is capable of generating two seemingly contradictory corporate structures, one approximating, "corporate nominalism," and the other, "corporate realism." It also suggests that these two variants of corporate structure correspond respectively to the American-style corporation which emphasizes the returns to shareholders and the Japanese-style corporation which strives to reproduce its organization as a going concern. Such absence of a single corporate structure does not, however, imply the absence of a single principle unifying a variety of corporate governance systems in different countries. This article indeed argues that at the foundation of every corporate governance system lie the managers' fiduciary duties to the corporation and that its variation across countries is due to the variation of governance mechanisms supplementing fiduciary law.