The Corporation Concept — Then and Now
Long long ago, (after dirt, before 1850) the legal construct called a, “corporation” was invented. The idea behind it was both simple and equitable for everyone in the land. A corporate entity (group of people) were granted a limited amount of protection from liability in certain areas of the law in exchange for proving and annually recertifying that the function the corporation performs is done so in the best interests of the public at large. A good example of the sort of corporations that meet the criteria would be Hospitals.
If the corporation for whatever reason failed to prove their actions of the previous year were conducted in a manner consistent with the public’s best interests, the entity would lose the legal protections until they could prove they had straightened up.
This arrangement was for many years equitable for all, and it worked for all. Then, over time things changed and evolved.
I’m specifically avoiding using specific dates and legal precedence on purpose. My research contains more information about the evolutionary process of the corporate entity than my severe carpal tunnel problems will allow me to include here. That said, I highly recommend that you (the reader) do your own research on the subject and discuss it online. Maybe the corporation needs a leash?
Nowadays, there is a single fiduciary responsibility for almost every corporation. If a corporation does something in fulfillment of this single responsibility that would, if done by an individual person, be called a, “criminal act”, as luck would have it reality dictates that it is not possible in practice to imprison a corporation. This is usually regardless of the severity, scope or period of such illegal activity.
Yes, CEO’s on very rare occasions do go to jail for using a pen and a lie as weapons. As I said, it’s very rare indeed. (Think ENRON, Solyndra, Banksters etc.) What does it take to put a pen waving criminal in jail?
In my opinion, executives who decide to vacate ethics, ignore the law, and/or otherwise abuse their legal protections do so because they lack the competence and creativity necessary to discharge their single fiduciary responsibility. These executives are the root causes of a huge chunk of the problems in America today. Too often and too quickly these CEO’s forget that they are employees, not Owners.
My parents were both Executives in the finest sense. Mom was a Mortgage Banker whose area was, Fair Lending & Compliance for 25 years. My Stepfather was a self-made millionaire in software. His big contribution was being one of the very earliest pioneers in, “Software as a Service”. Growing up, thinking outside the box WAS the new box and messing with Mom or her rules was to directly provoke a merciless God. I learned how Executives look at the world. I can also translate between “Execuspeak” and English. But, only in one direction. What do you want from me? I was a child with no need to translate in the other direction. And s**t rolls downhill.
But, I digress.
The stark difference between the original idea behind the corporation then, and what it is now shows itself by my divulging the single fiduciary responsibility of a corporation in 2016.
- To maximize investor returns.
As the head of Scipio Biofuels Inc., it seems to me that the characteristics that 20 or 30 years ago became empty given presumptions instead of things Executives needed to prove if not daily, at least annually. The traditionally proper application of ethical values is my personal key to being able to sleep at night. I don’t think this is a bad thing at all. But, how will investors react to being told the truth all the time? Please educate me.