Corporate liability (WAS: Environmentalism in a Free society)
Sun, 13 Dec 1998 17:15:06 EST

In a message dated 98-12-13 14:21:53 EST, (Michael Lorrey) wrote:

> Corporations

> under the current mercatilist/socialist system carry such power to supress
> information only because the government lets them. In a system where civil
> law is the means of adjudicating all legal impacts, corporations have no
> standing as individual parties (whereas under the current system they are
> considered to be virtual citizens), so the officers and stockholders are
> individually liable. Operating in this manner would ensure that the
> stockholders take steps to ensure that the actions of its officers are not
> placing them in a position of liability.

I wonder about the implications of what you're proposing here, Mike. Consider that shareholder limited liability is one of the key elements supporting a secondary market for widely-held equity investment. Who will buy the stock of ABC Corp. on the secondary market if before they do they have to engage in a complete program of due diligence to be sure that they're not buying into personal liability for some then-well-hidden corporate policy? I know I wouldn't. Allowing corporations to be sued as legal persons actually benefits the plaintiff as much as limited liability benefits the shareholders: I only have to sue ABC Corp., not track down all of its (possibly millions of) shareholder.

A corporation's liability is reflected in its share price, so the market does act to discipline equity holders. And intentionally inadequately capitalized corporations can lead to "piercing the corporate veil" and thence to personal shareholder liability, so shareholders have a keen interest in seeing to it that a corporation is sufficiently capitalized to satisfy judgments against it. I don't see anything at all inconsistent with radical anarcho-capitalism in allowing corporate limited liability and corporate legal personhood.

	Greg Burch     <>----<>
	   Attorney  :::  Director, Extropy Institute  :::  Wilderness Guide   -or-
	           "Good ideas are not adopted automatically.  They must
	              be driven into practice with courageous impatience." 
	                      -- Admiral Hyman G. Rickover