Corporate law is again taking center stage in practice, policymaking, and scholarship. Despite this, commentators have yet to adequately answer a very preliminary question: is corporate law part of private law, or is it public law? This distinction has far-reaching implications for ongoing policy discussions, including the debate between shareholder and stakeholder conceptions of the firm, epitomized by a series of recent high-profile legislative proposals and scholarly works.
As this Article demonstrates, corporate law is indeed private law. Relying on broader legal and economic theory, together with insights from the new private law (NPL) literature, this Article responds to the four main types of arguments raised by public theorists of corporate law: that the corporation’s affairs are dictated by its state-issued charter; that the requirement of registration with a state agency makes the corporation a “creature of the state”; that the mandatory, structural features of corporate law make it public law; and that corporations are required to take into account the interests of a broad array of stakeholders. Each claim is based on real-world observations, but as this Article illustrates, in every case, those facts actually point to corporate law being part and parcel of private law – just as much as contract, property, or tort law.
At the same time, this Article also explains how corporate law advances broader rule of law considerations. Corporate law is far from being the contractarian regime envisioned by some scholars since the 1980s. Instead, corporate law – like contract, property, and tort, albeit even more systemically – requires strict compliance with positive law (both public and private), and strongly upholds values of interpersonal justice and fairness. This Article expands on these points in a highly nuanced manner, not previously recognized in scholarship, or in the wider public debate about corporations in society.
Raz, Asaf, Why Corporate Law Is Private Law (December 22, 2021).