In my preceding post it seems that I made a mistake by stating that a corporation do not own itself which seems to conflict with the reasoning that allow ,for example, public corporations to buyback their own shares in the market. Nevertheless, a corporation is owned by its shareholders and it is upon the opposing side to prove that issued "authorized shares" are issued from the direct ownership of the corporation not shareholders who "authorize" the use of these shares for the corporation.
Beside showing how the derivative standing seems to be very weak in comparison with the direct one for dilution cases, here is a test that emphasize that weakness. It seems that there is a condition that is necessary for the existence of derivative injury (which imply injury to the corporation). That condition or test is achieved by simply imagining the corporation being sold to a new owner. If with that transformation of ownership the injury to the corporation would persist then this necessary condition (but may not be always sufficient) for the existence of a derivative standing is satisfied. That makes sense since if an injury was truly done to the corporation then it should stay with that corporation.
If we apply this test to the dilution cases we can see that what was perceived as an injury to the corporation would seize to exist with the transfer of ownership of the corporation. First, whether the buyer buys the corporation from one or one thousand owners or acquire a hundred shares or a million shares to achieve the buying process that buyer will end owning the same corporation. Second, it also wouldn't matter to the buyer how many of the authorized shares remain since the buying entity can change that to whatever it wants.
While this doesn't seem to be even close to what the reasoning of all these courts may miss, I emphasize again that I have seen how corporations and those with the financial power may get preferred treatment here.
No comments:
Post a Comment