Tuesday, July 08, 2014

Another reason (not the only one!) why a business corporation isn't a person

At least, not a person like you or me. This brief but compelling passage by Kent Greenfield (from "Hobby Lobby, “unconstitutional conditions,” and corporate law mistakes") has already been widely cited. But it deserves even more attention than it has gotten so far, because it zeroes in a crucial point that a lot of discussions seem to miss:
As a number of corporate law scholars and I argued in an amicus brief in the case, the very purpose of the corporate form is to separate the shareholders from the corporate entity. A distinction between shareholders and the company lies at the very foundation of corporate law. The condition that there be such a distinction is not an add-on; it goes to the definitional nature of the government benefit itself. Hobby Lobby’s presumption that shareholders can be seen as distinct from the company for purposes of, say, limited liability, but identified with the company for purposes of religious freedom changes the nature of the government benefit itself.

In other words, the Court has changed, definitionally, what it means to be a corporation under the state laws in question.
—Jeff Weintraub

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