Conflicts of Interest Between Corporations and Their Directors, Officers, Employees and Agents
CONFLICTS INHERENT IN THE CORPORATE STRUCTURE
The corporate form is a marvelously flexible device which has been ingeniously adapted to its purpose of securing through public subscription the vast sums of capital needed for modern industrial growth. Conventionally, it is owned by shareholders who elect directors; it is controlled by directors who select officers and fix policies; and, it is run by a management elected or designated by the directorsall engaged in a common enterprise united uniquely by the profit motive and regulated by competitive forces and by-laws. Others have written of the fact that this idealized concept, insofar as the reasonably large publicly held corporation is concerned, exists only in legal theory, but, in any event, a brief catalog of some examples of problems of divided loyalties, self-dealing and actual or potential conflicts which inhere in this structure may be helpful.
Although each share (absent preferred, special class, non-voting shares, etc.) is theoretically equal in value  to every other share and participates equally in earnings, shares which make up control are worth more than minority shares. A control bloc will command a premium and a small bloc representing negative control may also command a premium. Therefore you always have at least two classes of shareholdersthose who control managemen
This content is available from the following sources
Already a Subscriber? Sign In
Over 60 years of scholarship at your fingertips.
Buy the Publication
The book containing this article may be available in hard copy, or the article may be available individually. Please contact the Rocky Mountain Mineral Law Foundation at email@example.com or 303-321-8100.