Document Type
Article
Publication Title
Rutgers Law Review
Publication Date
1999
Volume
51
First Page
323
Abstract
In this Article, Professor Wade argues that the corporate law shareholder-primacy paradigm fails to adequately account for individuals who depend upon for-profit corporations for the educational, medical, correctional, and social services traditionally provided by government. These for-profit corporations, termed "Public Function Companies" by Professor Wade, have two distinct constituencies: shareholders who expect wealth maximization to guide corporate action and "Corporate Dependents" who rely upon the essential services administered by these corporations. Because corporate law generally requires officers and directors to act only in the interest of shareholders, Corporate Dependents may be left with inadequate services and no mechanism to influence corporate action. Professor Wade posits that when the needs of Corporate Dependents conflict with shareholders' desire for wealth maximization, Corporate Dependents should replace shareholders as the paramount beneficiaries of Public Function Company action.