Shareholder Primacy in Benefit Corporations

Fiduciary Obligations in Business (New York: Cambridge University Press 2020) (2020, Forthcoming)

Notre Dame Legal Studies Paper No. 191218

24 Pages Posted: 20 Dec 2019

Date Written: December 19, 2019

Abstract

The goal of the business corporation traditionally has been understood to be the maximization of shareholder wealth. A growing demand for social enterprise has led to the creation of various new forms of business organization, including the benefit corporation, that have the goal of creating both shareholder wealth and other public benefits. Although benefit corporations were developed to overcome the shareholder wealth maximization norm, it is not fair to say that they also overcome shareholder primacy. Properly understood, benefit corporations are shareholder-centric: they exist to allow shareholders to pursue altruistic goals rather than to require them to do so. This essay demonstrates this from the history and structure of the Model Benefit Corporation Act and argues that benefit corporation legislation ought to remain essentially enabling rather than mandatory in nature.

Keywords: benefit corporation, corporate governance, corporate law, corporate purpose, fiduciary duty, public benefit, shareholder primacy, wealth maximization

JEL Classification: K20, K22

Suggested Citation

Velasco, Julian, Shareholder Primacy in Benefit Corporations (December 19, 2019). Fiduciary Obligations in Business (New York: Cambridge University Press 2020) (2020, Forthcoming), Notre Dame Legal Studies Paper No. 191218, Available at SSRN: https://ssrn.com/abstract=3506824 or http://dx.doi.org/10.2139/ssrn.3506824

Julian Velasco (Contact Author)

Notre Dame Law School ( email )

2142 Eck Hall of Law
P.O. Box 780
Notre Dame, IN 46556-0780
United States
574-631-4965 (Phone)

HOME PAGE: http://law.nd.edu/directory/julian-velasco/

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