Looking for positives, but especially negatives. What are the pitfalls of not granting corporations the same rights as people/citizens?
Looking for positives, but especially negatives. What are the pitfalls of not granting corporations the same rights as people/citizens?
The main reason why corporate personhood exists is to limit the liability of owners. If I run a company and a customer slips and falls, they can sue the company, but they can’t sue me or my shareholders. Without any form of personhood there could be no limited liability. The customer would be suing me and the shareholders directly.
I don’t think it would change much for giant corporations but that would be terrible for small businesses. I have a friend who makes his own stuff and sells it to people. He doesn’t make much, a few thousand a year. He incorporated to prevent losing his house from a customer suing him.
I once worked for an Unlimited Liability Corporation (ULC). It’s a corporation where the owners and shareholders can be sued directly for company actions. They took on that higher risk because the tax breaks that come with a ULC were worth it I guess. So it’s not like giant corporations wouldn’t exist if they weren’t considered people, but it probably would hurt entrepreneurship.
The main issue Americans have with corporate personhood is the “freedom of speech” thing the US Supreme Court ruled on in Citizens United v. FCC. The ruling basically said corporations can’t be prevented from giving their money to political causes because its a violation of the corporation’s freedom of speech. That’s specifically a US ruling. Other countries don’t grant rights and freedoms to corporations.
Why should he be immune just because he wrote something on a piece of paper? Why shouldn’t that limited liability just be a thing to start with?
Because if we didn’t have such protections, the ONLY people who could ever afford to go into business are the already-super-wealthy.
Nobody would ever open a small business if it meant risking the roof over their childrens’ head.
I’m asking why the paper is necessary, as in why shouldn’t the limited liability just be a thing that exists in the first place.
Because the line does need to be drawn somewhere. You can’t just go out, cause harm to someone, and then claim “Oh, that harm was done by my company, not me personally. Incidentally, my company only has like $20 in assets for you to recover.”
The paperwork also doesn’t entirely grant you the limited liability. You need to actually operate the company as a separate entity from yourself. If you “piece the veil” between individual and company, you may not be able to claim limited liability in court.
Why though? Why does ‘operating as a company’ have less liability than an individual?
See 2 comments ago. Nobody except the ultra rich could afford to go into business if it meant risking all of their personal assets.
And like already mentioned: it’s not less liability, it’s separate liability. Misconduct as a business (which may not even be the owner’s fault, it could be an employee’s) can risk all of the business assets, but not personal assets owned outside the business.
The company doesn’t have ‘less’ liability, it has separate liability.
You wouldn’t expect that you would be responsible for the actions of a roommate in most cases. Creating a business entity separates the business from the person running it. The taxes are separate, the owned properties are separate, the liabilities are separate.
Say you own a small restaurant, The building it resides in (if you owned it) is owned wholely by the company. You also own a personal residence. Now a customer comes in and suffers some injury and they sue. They would sue the business and if it all went badly for you they might take ownership of the business assets including the building it’s in. They could NOT however come take your personal residence that’s not property of the business.
If you tried to do some shady biz and change ownership of the assets away from the company before a judgement was made then the customer could feasibly ‘pierce the veil’ as they say and include you into the suit personally.
You are explaining how, not why.