The Company and its Constituents

This paper considers two models of the modern company and the possible impact of those models, first, on the legal relationship of corporate constituents to the company, and, secondly, on the liability of corporate constituents.  The chapter traces the historical origins of the contractual model and the entity model. It is argued that the contractual model has its origins in early unincorporated forms and is based on the collectivity of the shareholders. The entity model has its origins in early incorporated forms with corporateness bestowed by the State and with the company an artificial legal person separate from shareholders.  The chapter sets out how the two forms have existed either in parallel or have been conflated throughout the history of the modern company. It is argued that the entity model is normatively superior as it distinguishes the different legal relationships corporate constituents have with the company.