This is interesting. Basically Maryland has a law that lets you create a corporation whose primary obligation is something other than maximizing profits, so that shareholders can't sue you. The corporations are otherwise identical to normal corporations, but the commitment to some particular cause can potentially attract some customers, in addition to fulfilling the moral goals of the people founding it.
Posts: 4136 | Registered: Aug 2008
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Hm. It's an intriguing idea. I'd actually consider offering a tax break to companies incorporated under that law.
Posts: 37449 | Registered: May 1999
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I think it'll be interesting to see how many firms do it without the tax break. They can add a tax break later after they get a baseline on how this thing works out.
Posts: 4136 | Registered: Aug 2008
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I look forward to the state-sponsored corporations advancing detestable causes, and maybe even getting tax breaks.
Corporations have always been allowed to take moral considerations into effect. The directors of the corporation simply decide that behaving morally is what will, in the long run, be profitable. Such a decision is generally unimpeachable under US corporate law. There are even precedents for writing certain sorts of moral considerations into corporate charters. In other words, this is nothing but grandstanding and rent seeking.
(edit: by "state-sponsored" I mean corporations for which the state is in part responsible for checking that they're adhering by their stated moral code. We can have delights such as corporations that advance euthanasia being taken to the courts by supporters that feel they chose some other goal when they should have advanced euthanasia).
Posts: 15770 | Registered: Dec 2001
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quote:It seems to me that in that scenario, shareholders will disagree and act to replace the directors.
They never have that I'm aware of. Corporations take moral stances moderately often, and I've never heard of a board being ousted for doing so. Could you provide a single example of the shareholders doing what you say they'd be likely to do?
(And, of course, few if any of these corporations will become publicly traded, and private corporate boards typically take such actions only in close cooperation with the owners -- much as will be the case with this law).
Posts: 15770 | Registered: Dec 2001
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That's nice; I'm pointing out a reality, not a want to be. Very few corporations of any sort become publicly traded, and corporations of this type will be a small minority at best. It is extremely unlikely any will ever become publicly traded.
Posts: 15770 | Registered: Dec 2001
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Dealing with them how? I've merely been talking about the actual law that this thread was created about. If you want to talk about something else, you should probably mention it instead of running a guessing game.
And feel free to come up with the example you're looking for from among publicly traded corporations that have taken moral stances; there are numerous examples. Surely, if you're right about them being voted out by shareholders it would have happened at least once. Heck, it'd be a big event in the financial news.
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