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Corporate Personhood

Look. You want to know about corporate personhood. Fine. Don't expect me to hold your hand, though. It’s a concept that’s been around longer than your great-great-great-grandparents, and frankly, it’s still as messy as a forgotten art project.

The Notion That Corporations Can Have Some Legal Rights, Responsibilities, and Accountability

Right, so, the whole idea is that a corporation, this… thing created by law, can be treated as a person. Not a breathing, bleeding, feeling person, obviously. More like a legal construct, a juridical entity. It means, separate from the actual humans who own it, run it, or work for it, this corporation has some of the same rights and obligations as you or I. Most places, this means they can own property, sign contracts, and yes, they can be sued or sue others. It’s all very… formal.

  • A Word of Caution: You might notice this article leans pretty heavily on the United States perspective. Don't get it twisted; this isn't some universal truth. If you’re feeling ambitious, you can always try to fix it. The talk page is there for a reason, or you could just start fresh. Just don't expect me to be thrilled about it. (April 2023)

Early History

Corporations as legal entities aren't some modern invention. They’ve been around, morphing and evolving, for centuries. Think ancient India, where these guild-like śreṇī were granted legal standing for public and economic reasons, as far back as 800 BC. Then you have the Roman Republic, which recognized legal personhood for municipalities and various associations, the collegia. These weren't just random groups; they had distinct rights and duties, separate from their members. Some of them even resembled the Catholic Church in its early days.

Fast forward to the Middle Ages. Juridical persons, whether chartered as corporations or foundations, became crucial for holding assets collectively and perpetually. This was a way to avoid the mess of inheritance laws fragmenting property. Incorporation also offered practical advantages over simple partnerships: a corporation’s existence didn’t hinge on a single member’s lifespan, decisions could be made without everyone agreeing (no more unanimity debates!), and crucially, liability was limited. The very word "corporation" comes from the Latin corpus, meaning "body." By the Renaissance, jurists were comfortable with the idea that chartered entities like churches and universities could own property, make deals, and be sued, all independently of the individuals involved. This "power of perpetual succession" was a big deal, especially for religious groups, ensuring their property didn't just revert to some feudal lord or get taxed to oblivion upon someone’s death. Even secular towns got in on the act, chartering rights for self-governance. Commercial ventures, though, were slower to adopt this model. The East India Company in 1600 was a bit of a game-changer, and by the end of that century, commercial incorporation was becoming more common across Europe and the Americas. By the 19th century, the paths of British and American corporate law had begun to diverge, with the UK focusing on structures akin to joint ventures and the US grappling with a more complex corporate landscape.

Contemporary Global Approaches

It’s not just a Western thing. How corporate personhood is handled varies, but the core concept persists.

Common Law Systems

  • United Kingdom: The UK, where much of this legal framework originated, has a robust system. Companies formed under the Companies Act possess separate legal personality. This means they can own things, enter into agreements, and face legal action, all as a distinct entity. Oversight is primarily managed through Companies House.
  • Canada: Canada follows suit, with both federal and provincial laws recognizing corporate personhood. The Canada Business Corporations Act grants corporations most of the rights of natural persons, although there are specific limitations, particularly concerning political activities, that differ from the United States model.
  • Australia: Governed mainly by the Corporations Act 2001, Australian corporations also have legal personality. The Australian Securities and Investments Commission (ASIC) handles the regulatory oversight.

Civil Law Systems

  • Germany: German law grants corporations legal personality separate from their shareholders. Their system often emphasizes stakeholder governance, with employee representation on corporate boards being a notable feature, alongside strong regulatory frameworks that aim to balance various interests.
  • France: Various corporate structures in France, like the société anonyme (SA) and société à responsabilité limitée (SARL), confer legal personality. The French approach involves significant regulatory oversight and specific provisions for corporate social responsibility that can differ from those found in Anglo-American legal traditions.
  • Japan: Japanese corporate law, a blend of civil law influences and Anglo-American traditions, also recognizes corporate personhood. The system tends to lean towards stakeholder capitalism and long-term governance, with less emphasis on pure shareholder primacy.

Country Specific Laws

  • India: In India, a wide array of entities, including corporations and other non-human bodies, are recognized as "legal person". This means they can own property, sue, and be sued, with shareholders typically not being personally liable for the company's debts. The law extends this status to entities like deity and temples, churches, mosques, universities, and even rivers and animals in certain contexts. Since these entities are "voiceless," they are represented by guardians or representatives to assert their rights and fulfill their duties.

In the United States

The phrase "corporate personhood" in the U.S. context sparks ongoing debate about how much of human rights law applies to these legal constructs. It’s a complicated history, significantly shaped by a headnote in the 1886 Supreme Court case Santa Clara County v. Southern Pacific Railroad Co.. This note claimed to reflect the Court's view that the equal protection clause of the Fourteenth Amendment applied to corporations, even though the Court itself hadn't issued a written opinion on that specific point. This marked a significant moment, suggesting corporations, like natural persons, were entitled to constitutional protections. This idea had been building since cases like Dartmouth College v. Woodward in 1819. More recently, in Burwell v. Hobby Lobby Stores, Inc. (2014), the Court allowed a company to be exempted from certain healthcare mandates based on the owners' religious beliefs, highlighting how corporate rights can intersect with individual liberties.

Various rationales underpin the extension of constitutional protections to corporations in the U.S.:

  • 'Contractual', 'Associate', or 'Aggregate' Theory: This view holds that the property rights of individuals are protected, even when held through a corporation. The argument is that laws affecting corporations inherently affect the natural persons who make them up. It also suggests that corporations can be vehicles for shareholders to exercise their [free speech](/free speech) rights. This logic could extend to other associations of people, not just formal corporations.
  • 'Real Entity' or 'Natural Entity' View: This perspective shifts the focus of regulation, potentially challenging state authority.
  • Consequences-Based Approach: From the 1920s to the 1980s, thinkers like John Dewey argued that granting rights to corporations should be based on the practical outcomes, rather than abstract principles.
  • Nexus of Contracts: More recently, corporations are often seen as a network of contracts and economic agents acting on behalf of shareholders.

The Supreme Court's decision in Citizens United v. Federal Election Commission seemed to blend these perspectives, arguing that political speech rights shouldn't depend on whether the speaker is an individual or an association like a corporation.

Granting legal rights to corporations facilitates business operations. It allows them to engage in commerce, enter contracts, own property, and participate in legal proceedings. This structure simplifies taxation and regulation, and crucially, shields individual shareholders from personal liability for corporate debts and actions.

However, corporations don't get all the same rights as natural persons. For instance, they can't claim a Fifth Amendment right against self-incrimination, as that’s an individual protection. They also don't have privacy rights under the Privacy Act of 1974, which specifically defines "individual" in a way that excludes corporations.

The Citizens United v. Federal Election Commission ruling in 2010, which affirmed the right of corporations to spend unlimited amounts on political advocacy, has fueled calls for a Constitutional amendment to abolish corporate personhood. The majority in that decision framed it not as corporate personhood, but as the right of associations of citizens to speak freely.

It's important to note that individual shareholders can't typically sue to protect a corporation's rights; that power rests with the board of directors.

Historical Background in the United States

This section is a bit thin on citations, which is… disappointing. If you’re so inclined, feel free to add some reliable sources. Otherwise, it’s just a collection of… ideas.

During the colonial era, British corporations were chartered by the crown to operate in North America, a practice that continued after the U.S. gained independence. These charters often came with monopolies, like the one granted to the First Bank of the United States in the Bank Bill of 1791. While the federal government chartered some corporations, the states largely took over this role. In the late 18th and early 19th centuries, states began issuing charters more readily under general laws, shifting away from the need for specific legislative acts.

The extent to which the government could interfere with corporate affairs was a point of contention from the nation's inception. Early legal battles, like the one involving the College of William and Mary in 1790, defended a corporation's right to self-reorganization. As the Industrial Revolution gained momentum in the 19th century, corporations became the preferred structure for large businesses. They provided a vital mechanism for raising the substantial capital needed for ventures like railroads, which were capital-intensive and inherently risky.

Following precedents like the Dartmouth College case, corporations were seen as extensions of their shareholders' rights, entitled to certain legal protections against arbitrary state action. The adoption of general incorporation statutes in states like New Jersey and Delaware in the late 19th century further facilitated this, allowing for easier formation without the government-granted monopolies of earlier charters. The Santa Clara County v. Southern Pacific Railroad case in 1886 solidified the application of the Fourteenth Amendment to corporations, a doctrine that has been consistently reaffirmed.

Case Law in the United States

The U.S. Supreme Court has a long history of recognizing corporations as legal entities with rights.

  • Trustees of Dartmouth College v. Woodward (1819): This landmark case established that a corporate charter was a contract protected by the Constitution. This ruling was foundational for recognizing corporations' ability to enter into and enforce contracts.
  • Society for the Propagation of the Gospel in Foreign Parts v. Town of Pawlet (1823): Justice Joseph Story extended protections to corporate-owned property, equating them to those of natural persons. Chief Justice Marshall later articulated the idea that incorporation bestows "the character and properties of individuality on a collective and changing body of men."
  • Santa Clara v. Southern Pacific (1886): While the Court itself didn't issue a written opinion on the matter, Chief Justice Waite indicated that the Fourteenth Amendment’s equal protection clause applied to corporations. The court reporter, Bancroft Davis, noted this in the headnote, stating the Court was "all of the opinion that it does." Though not precedent itself, this was soon followed by Pembina Consolidated Silver Mining Co. v. Pennsylvania (1888), which explicitly stated that "private corporation[s] are included" in the Fourteenth Amendment, viewing them as associations of individuals. This doctrine has been consistently upheld.

It's crucial to understand that the Fourteenth Amendment doesn't grant corporations immunity from all regulation. Like individuals, they are subject to various laws. The Court has affirmed that while corporations are legal "persons," this doesn't prevent states from imposing reasonable regulations on their business practices, as seen in cases like Northwestern Nat Life Ins. Co. v. Riggs (1906).

Legislation in the United States

  • The U.S. Code, specifically Title 1, Section 1 (the Dictionary Act), generally defines "person" and "whoever" to include corporations, companies, associations, firms, partnerships, societies, and joint stock companies, alongside individuals, unless the context clearly indicates otherwise.
  • This broad definition has significant implications:
    • Corporations can enter into contracts, sue and be sued, and be held liable under both civil and criminal law.
    • Individual shareholders are typically shielded from personal liability for the corporation's debts and damages.
    • Similarly, individual employees, managers, and directors are liable for their own misconduct but not generally for the corporation's actions.
  • The extension of certain constitutional rights to corporations is a frequent subject of discussion and controversy.
  • Corporations have always been able to conduct commercial activities, like entering contracts and owning property, essentially acting as a sole proprietorship but with limited liability for their shareholders.

There are critics, like Ralph Nader, who argue from an originalist perspective that the doctrine of corporate personhood under the Fourteenth Amendment is unfounded. Even Chief Justice William Rehnquist, while not always objecting to the application of rights, expressed skepticism about the Court's "invention" of corporate constitutional rights. Nevertheless, the assumption of corporate personhood, as established by the Waite court, has persisted.

Corporate Political Spending

This is where things get particularly heated. The role of corporate money in politics is a central point in the broader debate about campaign finance reform. Key legal milestones include:

The core of the debate hinges on Buckley v. Valeo and Citizens United. Buckley established political spending as speech, and Citizens United extended that protection to corporations, viewing them as "associations of citizens."

See Also

Supreme Court Cases