Member Corporations, Property Corporations, and Constitutional Rights

Law and Ethics of Human Rights 11 (1): 31-60 (April 2017)

39 Pages Posted: 18 Jul 2017

See all articles by David A Ciepley

David A Ciepley

Institute for Advanced Studies in Culture, The University of Virginia

Date Written: July 14, 2017

Abstract

Historically, a corporation was regarded a “mere creature of law” possessing “only those properties which the charter of its creation confers upon it, either expressly or as incidental to its very existence.” This “concession” or “grant” theory has been eclipsed, especially in the United States, by the view that the corporation is a mere association of natural persons, and that its rights are those of its “members” and “owners,” the shareholders, who, as persons and citizens, bring even constitutional rights to the corporation. This associational view rests on a triple confusion. First, it confuses the corporation (the rights-bearing corporate entity) with the corporate firm, which is associational, leaving the impression that the corporation can be reduced to natural persons. This underwrites the second confusion: that the business corporation is a member corporation, with the shareholders as members, when in fact it is a property corporation without members. The histories of the Dutch and English East India Companies are drawn on to explain the origins of this second confusion. Third, it confuses the member corporation with a partnership, when it imagines that the rights of the corporation are simply those of its individual shareholders. Instead, as maintained by the grant theory, a corporation should only receive such rights as are conferred on it by charter or statute on the basis of policy considerations.

Keywords: corporation, constitutional rights, member corporation, property corporation, members

JEL Classification: N10

Suggested Citation

Ciepley, David A, Member Corporations, Property Corporations, and Constitutional Rights (July 14, 2017). Law and Ethics of Human Rights 11 (1): 31-60 (April 2017). Available at SSRN: https://ssrn.com/abstract=3002327

David A Ciepley (Contact Author)

Institute for Advanced Studies in Culture, The University of Virginia ( email )

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