The Legal Nature of the Modern Corporation

Abstract

The presented clause considers concept as founder not only of the best interests of the corporation («shareholder value»), but also as maker of the public (social) good. The good governance mechanism allows to consider interests of shareholders, board of directors, employees and a society, reaching final efficiency: increasing shareholder value in the long term (welfare of shareholders), and also carrying out socially useful function (social civil responsibility). The clause purpose is company consideration through a prism of the founder of the best interests of the corporation by introduction of the mechanism of good governance (a principle of team production theory). A team production theory means the act of mutual cooperation in atmosphere of trust, mutual support, taking into account stimulation of participants at the decision of long-term tasks in the company (shareholder — board — employee). One of features of achievement of efficiency of team production theory is legitimate carrying out of corporate meetings considering interests of such participants as shareholders and members of board. In other words, the participant of the company realizes not only personal and command responsibility at realization of the put questions. Besides, in clause is considered the mechanism of «lock-in of assets» with which help it is possible to constrain the appetites connected with withdrawal of assets from the company from shareholders with short-term interests. At the decision of the tasks connected with good governance, the company inevitably faces agency conflicts between shareholders and management. There are given conflicts as each interested participant has own economic interests indeed. As a result of such destructive conflicts there is a destruction of the best interests of the corporation and social good. In other words, the company does not serve interests of a society, and, on the contrary, destroys representation about the utility, acting in a role of «the Frankenstein monster» (creating roguish schemes, for the purpose of non-payment of taxes, reducing the staff of employees). Therefore, the author aspires to present the company as founder and the fair distributor of the best interests of the corporation and social good in long-term prospect (saving and investment technology), including use of the mechanism of good governance.