We are the generation that has witnessed revamping of the fundamental concepts of corporate Law over the years. For ages, the ideas that companies are independent, private contractual entities are acknowledged as reality, that they have extensive powers to create funds in whatever manner and in whatever areas they think fit.
We only have a thought in mind that management's liability does not lie with society as a whole, the public or with its employees, but with its investors or shareholders. Corporates have wide-ranging powers, but they use them for playing a small role: They exist only to earn profits.
But Kent Greenfield again wants us to know about the reformed answers to various questions like How are companies better conceptualised? Who controls them? What are their commitments or obligations?
In his book, he contests this conception. He also states that if corporate Law is reasonably seen as Law for the public, corporate interests should be pushed in the interest of the public benefit.
Opinion about the Book
This is simply the best book written by Kent Greenfield. A remarkable indictment of the corporate law philosophy of the Shareholder's superiority, complete with the realistic and radical law reform measures intended to bring so-called "public "companies back into the public interest promotion practice.
By calling for a broad conception of benefits and cost, Greenfield convincingly sets out new standards for corporate Law intended to represent the needs of the society as a whole by fostering productivity, transparency, and justice. In short, the best and well-written radical criticism ever published on Corporate Law.
What Kent Greenfield wants to communicate through this wonderful book?
Through this book, Kent Greenfield discusses a long tradition of public companies that valued well-being of the public as it is important for good company. An idea that the author maintains has all elements but vanished from the corporate world of today. The corporates regulated by the laws like environmental laws or constitutional Law must always uphold the interest of the public as the consequences of decision making of a company reach beyond their selected shareholders.
Various important issues of corporate law have been discussed in the book, followed by progressive solutions for the same. In this next part of the article, we have discussed both the issues in brief. Let's have a look at them.
The dictatorship of the Shareholder
Among the phenomenon that the author is extremely focused to see reforms, the tyranny of the interest of the Shareholder ranks at the top of the list. He also states, that in law schools, the pursuit of the interest of the shareholders is accepted as fact.
Even in many public corporations, management is forbidden by Law having a thorough understanding of the needs of the masses when making decisions, since those of shareholders of the companies are affected in doing so.
This condition promotes more business controversies and less care about the company's employees or the public benefit.
Closure of Loopholes
Kent Greenfield berates the gap in the Corporate Law of Delaware as a means to circumvent democratic stresses. The cost of the legal framework is to be exported to other states, which establishes a slippery slope for other states to follow.
The article presents corporate Law pessimistically as a means of recognising a progressive goal of creating prosperity and reducing social hierarchies all over economic classes.
With more proactive and publicly-oriented corporate governance, income will be created to support society as a whole and not just for a narrow autocracy of shareholders or the employees of the company.
Benefits to society as a whole
Kent Greenfield also stated that we should take advantage mainly, by dismissing the unrealistic contractual expectations that ruled the sector in the last generation. By employing extended fiduciary responsibilities to the company as a whole not just to the investors or shareholders, a public interest aspect should be incorporated into corporate governance.
The best and easiest way to enforce these responsibilities is very systematic. It can be done by widening the right of the board of directors to include those who can advocate with the company's non-shareholders or stakeholders. These extended rules will result in support to the organisation as a whole and are therefore expected to have positive benefits towards the society.
The traditional view is fully flawed. So, there is a multitude of progressive possibilities in the alterations of corporate Law. The existing potential of the companies enables them to be focusing on long term gains by considering the interest of all the stakeholders of the company.
However, the moment has come to make use of the strong engine for creating wealth represented in the corporate type in the context of economic and social tasks larger than the further advancement of financial and managerial classes.
However, this piece of write-up has set forth a host of seriously abbreviated claims about why we find ourselves at a time when it is possible to reconsider the first rules of corporate law and how we should rethink them. For a century, the traditional ideology of the corporate law, the prevailing understanding of the private Law, contracting, and mainstream view of shareholder supremacy has held sway. Yet it is accessible to and worthy of a challenge.