Document Type
Article
Publication Title
Nevada Law Journal
Publication Date
2018
Abstract
The corporation cannot exist without its founders complying explicitly with the requirements for incorporation provided by state statutes. The artificial entity theory acknowledges that the corporation cannot and will not exist until its founders comply explicitly with the requirements for corporate formation and in-corporation imposed by the state. A corporation is also, by design, a new and distinct entity divorced from its people. The real entity theory acknowledges that once a corporation is formed, it has rights that belong only to the corporation it-self, wholly separate from its founders. By merging the artificial entity and real entity theories, the Court may properly define corporate rights.
Because of the dual nature of the corporation, corporate personhood should be a question of fact, not a matter of law. Corporate personhood requires weighing the evidence and making a case-by-case determination based on the choices made at formation and how the corporation operates. To determine a corporation’s rights the Court should engage in a two-step analysis that gives deference to this duality. The Court should first rely on how the corporation is defined by statute to determine whether it is required to acknowledge the existence of the right for the corporation itself, then decide whether state action infringes on that right if it exists. Problems arise in corporate personhood jurisprudence when the courts give rights to corporations that states, legislatures, and founders did not intend.
When granting corporations constitutional rights based on the rights of founders and shareholders in the aggregate, the Court is ignoring the parameters of the state law definition of the corporation, as well as the affirmative choices of corporate founders who deliberately chose the corporation over other forms of business. Citizens United and Hobby Lobby are recent examples of this disregard of corporate statutes for the sake of protecting the rights of the people who make up the corporation. Engaging in a two-step analysis shows that it is impossible for a corporation to be an association of citizens, which is contrary to the commentary in those court decisions.
Recommended Citation
Carliss N. Chatman, The Corporate Personhood Two-Step, 18 Nev. L.J. 811 (2018).