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This chapter provides an overview of a real entity theory of company law. It begins by exploring three main theories of the company. The first theory explains the company as a contract; it forms the basis on which agency theory builds. The second theory conceives the company as a concession of the state, while the third theory characterizes the company as a real entity. The chapter then looks at a modern version of real entity theory and its application to company law. According to real entity theory, organizations or firms are social phenomenon outside of the law and they are autonomous actors in their own right. This occurs because human beings change their behaviour when they act as members of a group or an organization. Company law finds this phenomenon and evolves with a view to supporting autonomous action by organizations.

Chapter 2 considers whether the business corporation can fairly be considered an association. It recounts the history of the corporation, from its ancient predecessors to its modern manifestations. It shows how the corporation evolved to meet the needs of its particular era. Although the corporation has long been viewed as an “artificial person,” what this phrase means has also evolved over time. Concession theory gave way to real entity/natural entity theory, which gave way to aggregation theory, private property theory, and, ultimately, the nexus of contracts/contractarian conceptualization of the corporation. The chapter closes with an articulation of the chief characteristics of the modern corporation, concluding that these characteristics do not generally comport with those of an association—especially in light of the shareholder primacy norm.

This concluding chapter summarizes how the previous chapters explained company law through a real entity theory. According to this theory, the law does not create organizations but finds them as a real social phenomenon. When human beings interact, habits, routines, processes, and procedures form. These affect the way participants of an organization act and so are real in their consequences. Organizations are characterized by this social structure. There also exists individual agency, which enables participants to deviate from the social structure and over time also to modify it. At a positive level, company law can be explained as making it easier for organizations to act autonomously and also as supplying a decision-making process that assigns roles to directors, shareholders, auditors, and a company secretary. Not all organizations are companies and not every company operates as an organization. Company law is nevertheless designed with a view to facilitating autonomous organizational action.

This chapter evaluates the rules that determine the attribution of the actions of human actors to companies. These contain elements that demonstrate that company law is designed for the operation of organizations and that therefore a real entity theory is best suited to explain the law as it stands, and also to formulate normative recommendations. Indeed, conceiving companies as serving real entities helps to explain the approach taken by the law in relation to corporate criminal liability. Companies are actors whose acts are sometimes determined by their shareholders and directors. But they do not fully control what companies do. Companies act autonomously through habits and procedures that have formed between the individuals who act for and contribute to them. These procedures cause companies to become independent of their individual actors and can lead to blameworthy conduct.

This chapter examines the practice of attributing moral and legal responsibility to corporations and its potential for abuse in three different contexts. First, the author describes how the concept of corporate legal personhood has been deployed to shield corporate decision makers from the full legal consequences of their acts. Second, the author shows how the doctrine of legal personhood was used in the Citizens United case to try to disguise the abridgement of the free speech rights of natural persons. And, finally, the author shows how the real entity theory of the corporation has been used by progressive legal scholars to try to dispossess or expropriate corporate shareholders. The chapter concludes that the metaphor of corporate responsibility lends itself to exploitation by insiders to obscure true responsibilities, stakes, and rights.

This chapter begins the presentation of a normative theory of the corporation, assessing corporate law in light of the argument in Part II. It argues that the relational approach to law, developed and pioneered by 20th-century feminist political and legal theorists, has a natural affinity with the norm-governance approach developed in previous chapters. While not always explicitly dealing with the specific questions that this book is concerned with, the framework and method of analysis that these scholars have developed for other branches of the law are useful for drawing out the implications of the norm-governance theory for questions of corporate law. Drawing on this tradition, this chapter sketches out what a relational approach to corporate law and business entails, the types of concerns it can help register, and some of the consequences this approach has for how firms and corporations are, and ought to be, structured. This includes a novel way of understanding corporate personality, fiduciary duty, limited liability, and at-will employment.