4 ms·

Or make the execs and shareholders responsible, e.g. by ruling that limited liability doesn't apply when companies commit crimes.

cwan 17y ago
I'm sure one of the many lawyers who lurk can elaborate but I'm pretty sure that limited liability doesn't shield managers who commit criminal acts.
- cabalamat 17y ago
  It doesn't. It does shield shareholders. Sharesholders control what a company does, by choosing its directors, so if they are made responsible for a company's misdeeds, they'll have an incentive to police it.
  - elai 17y ago
    So if I buy a few stocks in microsoft as a %0.00001 stock holder and microsoft get's another anti-trust charge I should be held liable too?
    - cabalamat 17y ago
      Obviously if you only hold a piffling number of shares, you have little control over the company. So it'd make sens to restrict this to major and/or controlling shareholders.
dkokelley 17y ago
Making the shareholders legally liable is a bad idea. To start, it defeats one of the primary purposes of incorporating (more companies would remain as private entities, and enjoy lower taxes and fewer reporting obligations). In order to justify shareholder liability, more individual control by the shareholders would be necessary. Think of what the decision process would be like if America were a pure democracy. If voters were responsible for what their elected officials did (think corruption by our officials), then we would demand more control over their actions - Why have them if we make all the decisions anyways? The same is true for corporations. Shareholders elect board members, who in turn elect managers who run the company. The execs are responsible if they commit fraud via the company. I think that making the board of directors as responsible as the management is a good idea, since it requires the board to police the company, instead of turn a blind eye to the management team's fraud when it's producing positive returns. The individual shareholders though, should not be liable for the actions of an often distant management.

cwan 17y ago

I'm sure one of the many lawyers who lurk can elaborate but I'm pretty sure that limited liability doesn't shield managers who commit criminal acts.

cabalamat 17y ago
It doesn't. It does shield shareholders. Sharesholders control what a company does, by choosing its directors, so if they are made responsible for a company's misdeeds, they'll have an incentive to police it.
- elai 17y ago
  So if I buy a few stocks in microsoft as a %0.00001 stock holder and microsoft get's another anti-trust charge I should be held liable too?
  - cabalamat 17y ago
    Obviously if you only hold a piffling number of shares, you have little control over the company. So it'd make sens to restrict this to major and/or controlling shareholders.

dkokelley 17y ago

Making the shareholders legally liable is a bad idea. To start, it defeats one of the primary purposes of incorporating (more companies would remain as private entities, and enjoy lower taxes and fewer reporting obligations). In order to justify shareholder liability, more individual control by the shareholders would be necessary. Think of what the decision process would be like if America were a pure democracy. If voters were responsible for what their elected officials did (think corruption by our officials), then we would demand more control over their actions - Why have them if we make all the decisions anyways? The same is true for corporations. Shareholders elect board members, who in turn elect managers who run the company. The execs are responsible if they commit fraud via the company. I think that making the board of directors as responsible as the management is a good idea, since it requires the board to police the company, instead of turn a blind eye to the management team's fraud when it's producing positive returns. The individual shareholders though, should not be liable for the actions of an often distant management.