Limites liability
Draft
Limited Liability, Rights of Control and the Problem of Corporate
Irresponsibility
Paddy Ireland
Abstract
There is has long been a tendency to see the corporate legal form as presently constituted as economically determined, as the more or less inevitable product of the demands of advanced technology and economic efficiency. Through an examination of its historical emergence, focusing in particular on the introduction of general limited liability and the development of the modern doctrine of separate corporate personality, this paper takes issue with this view, arguing that the corporate legal form was, and is, in large part a political construct developed to accommodate and protect the rentier investor. It is, moreover, a construct which institutionalizes irresponsibility. Against this backdrop, different ways of trying to resolve the problem of corporate irresponsibility are explored. The key, the paper suggests, is to be found in decoupling the privilege of limited liability from rights of control.
Key Words
Corporate governance; corporate irresponsibility, limited liability; rentier investment
p.w.ireland@kent.ac.uk
Paper first delivered at the Corporate Accountability, Limited Liability and the Future of Globalisation Conference, SOAS, July 2007
1
Limited Liability, Rights of Control and the Problem of Corporate
Irresponsibility
Paddy Ireland
Free incorporation by registration came to Britain in 1844, followed in 1855 by general limited liability, putting in place two of the central elements of the corporate legal form which has come to dominate business organisation around the world. There has long been a tendency to see the emergence of the corporate legal form as not requiring much in the way of explanation. It is widely seen, as one group of corporate law scholars recently put it, as `induced by economic exigencies’ (Kraakman et al,
2004, p. 1). Its key elements - legal personality, limited liability,
Limited Liability, Rights of Control and the Problem of Corporate
Irresponsibility
Paddy Ireland
Abstract
There is has long been a tendency to see the corporate legal form as presently constituted as economically determined, as the more or less inevitable product of the demands of advanced technology and economic efficiency. Through an examination of its historical emergence, focusing in particular on the introduction of general limited liability and the development of the modern doctrine of separate corporate personality, this paper takes issue with this view, arguing that the corporate legal form was, and is, in large part a political construct developed to accommodate and protect the rentier investor. It is, moreover, a construct which institutionalizes irresponsibility. Against this backdrop, different ways of trying to resolve the problem of corporate irresponsibility are explored. The key, the paper suggests, is to be found in decoupling the privilege of limited liability from rights of control.
Key Words
Corporate governance; corporate irresponsibility, limited liability; rentier investment
p.w.ireland@kent.ac.uk
Paper first delivered at the Corporate Accountability, Limited Liability and the Future of Globalisation Conference, SOAS, July 2007
1
Limited Liability, Rights of Control and the Problem of Corporate
Irresponsibility
Paddy Ireland
Free incorporation by registration came to Britain in 1844, followed in 1855 by general limited liability, putting in place two of the central elements of the corporate legal form which has come to dominate business organisation around the world. There has long been a tendency to see the emergence of the corporate legal form as not requiring much in the way of explanation. It is widely seen, as one group of corporate law scholars recently put it, as `induced by economic exigencies’ (Kraakman et al,
2004, p. 1). Its key elements - legal personality, limited liability,
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