Local Corporate Law
Posted: 11 Aug 2016 Last revised: 6 Mar 2020
Date Written: 2016
The conventional view of corporate law is that its scope concerns the “internal affairs” of an organization, and that such “internal affairs” are governed by the law of the state in which an organization is legally formed. Yet, this conventional view – known as the “internal affairs doctrine” – is incomplete and imprecise in its current formulation, and long overdue for clarification. For example, corporate law scholars have acknowledged: that an unsettled jurisdictional competition exists between states and the federal government; that federal laws that affect organizations’ structure, governance and rights intrude into the corporation’s “internal affairs,” exemplifying the ambiguous distinction between what is internal or external to an organization; and that the substantive scope of corporate law has shifted over time to adapt to the way in which society relates to corporations (whether as investors, consumers, or stakeholders more generally). Most recently, local laws also have emerged that affect the legal personality of, and principal-agent relationships within, organizations – topics traditionally considered to be within the scope of an organization’s “internal affairs.” While these local laws – which I have previously identified and termed “local corporate law” – further complicate the conventional view in new ways, they also offer the potential to reframe corporate law from a more comprehensive and cohesive perspective. Specifically, in this Article I argue that recognition of “local corporate law,” a new subfield of corporate law, can refine and simplify the “internal affairs doctrine,” among other important benefits for understanding the nature, making and practice of corporate law as well.
Keywords: Corporate Law, Local Government Law, Corporate Governance, Community Development, Social Enterprise
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