Persons, Things and Corporations: The Corporate Personality Controversy and Comparative Corporate Governance

The present article is a fresh attempt to 'end' the age-old controversy on the nature of corporate personality by declaring victory for both corporate nominalism and corporate realism. The key to this claim is the observation that an incorporated business firm is composed of not one but two ownership relations: the shareholders own the corporation as a legal thing and the corporation as a legal person owns the corporate assets. The corporation thus plays a dual role of 'person' and 'thing' in the system of law. This article's first objective is to elucidate the legal mechanisms through which this person/thing duality of corporation gives rise to two seemingly contradictory corporate structures--one approximating corporate realism and the other corporate nominalism. What goes under the name of capitalism differs widely among industrial societies, especially between America and Japan. American corporations are expected to maximize the returns to shareholders, whereas Japanese corporations strive to maintain and enlarge the corporation itself as an organization. The second objective of this article is to suggest that these two capitalisms correspond respectively to corporate nominalism and corporate realism, and that their coexistence on this globe is precisely what is implied by the variation of corporate structures the person/thing duality of corporation is able to generate. This article's third and last objective is to show that in spite of the essential indeterminacy of corporate structures it is possible to develop a unified theory of comparative corporate governance. Indeed, it is argued that at the foundation of every corporate governance system lie the managers' fiduciary duties of loyalty to the corporation. A variety of corporate governance systems in different countries is due to the variety of governance mechanisms supplementing fiduciary law.