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 governancemechanism 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 iscompany consideration through a prism of the founder of the best interests of the corporation byintroduction of the mechanism of good governance (a principle of team production theory). A teamproduction 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 productiontheory is legitimate carrying out of corporate meetings considering interests of such participants asshareholders and members of board. In other words, the participant of the company realizes notonly personal and command responsibility at realization of the put questions. Besides, in clauseis considered the mechanism of «lock-in of assets» with which help it is possible to constrain theappetites connected with withdrawal of assets from the company from shareholders with short-terminterests. At the decision of the tasks connected with good governance, the company inevitablyfaces agency conflicts between shareholders and management. There are given conflicts as eachinterested participant has own economic interests indeed. As a result of such destructive conflictsthere is a destruction of the best interests of the corporation and social good. In other words, thecompany does not serve interests of a society, and, on the contrary, destroys representation aboutthe utility, acting in a role of «the Frankenstein monster» (creating roguish schemes, for the purposeof non-payment of taxes, reducing the staff of employees). Therefore, the author aspires to presentthe company as founder and the fair distributor of the best interests of the corporation and socialgood in long-term prospect (saving and investment technology), including use of the mechanism ofgood governance.