New Zimbabwe.com

Mawere Business Class:  The corporate personhood

IT IS not ironic that the output of only 300 million Americans in a year exceeds the output of 1 billion Africans yet we all have the same privilege to use the donated 24 hours in a day?
IT is customary and perfectly reasonable to hold the view that traditional business schools and the knowledge imparted therein arm one with the requisite skills and analytical mind to succeed in the real world of business yet the reality suggests otherwise. Empirical evidence shows that business success is less related to the practitioner’s academic background and theoretical knowledge of business than the commitment to and actual service delivery. School dropouts have excelled in a world in which customers are the judges. 
The role of business in delivering the promise of an inclusive, prosperous and equitable society is often grossly misunderstood even by the so-called thought leaders. The illiteracy that pervades many societies about the true nature and purpose of corporate personalities has tended to limit options that advance human innovation and creativity principally because human creations can never be expected to be independent of human life.
A legal persona’s ability to add value to the human experience is inextricably linked to the actions of the very human being that does not understand the simple principle that aggregation holds the better promise to least cost solutions. In an undeveloped state, the concepts of property, legal personas, and the rule of law do not mean much but without them, the prospect of addressing the triple challenges of poverty, unemployment and inequality is limited.
The importance of the rule of law becomes pronounced when one critically examines the volume and value of goods and services conveyed through the intermediation of artificial legal persons. Without the existence of the law, it is impossible for many institutions we now take for granted in the human world to exist.
There is no evidence that before the arrival of the settlers, that we had our own heritage of institution building founded on the principles that were openly inherited at independence without fully comprehending the consequences and obligations therein. It is the law that gives birth to juridical persons, STUPID!!!
For any entity to have legal personality it must be capable of having legal rights and obligations within a legal system including the right to enter into legal contracts, sue and being sued. It is a sine qua non to in order to have legal capacity one must have a legal personality which then confers the ability of the legal persona so created by law to negotiate rights and obligations.Advertisement

When settlers arrived in the continent that we often recklessly claim to be ours simply on existential basis, they did not find a legal system in which artificial persons existed and legal institutions as we now know them in operation. What they found were natural persons i.e. physical persons prosecuting the business of life principally as hunters and gatherers. 
African commerce was not based on the rule of law and if it was the basis of what our restorative politics would have been on legally enforceable remedies founded on legal injuries. It one thing to say, the settlers encroached on land given for free by the creator and another to say that one has trespassed. Trespassing was a familiar term used in the colonial era because the term could not be relevant without the imposition of the rule of law irrespective of the legitimacy of that constitutional order.
The act of putting in place a constitutional order was the first step in creating the basis of exclusion based on some principles. The fact that the land reform program had to be executed in the manner it was in Zimbabwe suggests a serious fault line in the construction of the game. Equally, to have expected the reversal of a program prosecuted by hustlers to be financed 100 years later by a foreign state, was unrealistic from the day the proposal was mooted.
It is common cause that the second form of legal personhood was introduced in Africa by settlers who understood the power of the rule of law in advancing their interests to pursue happiness. It would not have made sense for settlers to travel all the way to Africa to be poor. Poverty hardly calls for adventurism for adventurers are normally driven by self-interest. Accordingly, the premise of any form of reparations or restorative justice is misplaced in that it often assumes that the settlers were agents of the imperial power when no evidence exists to support this proposition.
Settlers migrated principally motivated by narrow and selfish interests and certainly not part of any project. Acceptance of this proposition would have produced different set of outcomes in the case of Zimbabwe’s land reform program. Some have argued that in the mind of the settlers, they saw no harm in excluding natives from participating in their system of governance and commerce as the way of life of natives was deemed to be inferior and not worthy of adopting.
The knowledge about juridical persons also referred to as juridic, juristic, artifictious persons, lat, persona ficta being groups of individuals, such as corporations that are treated by law as if they are real persons did not exist in Africa as far as history records. It is clear from recorded history that no single settler aspired to be a native and so this class of human beings proceeded to create their own eco-systems on African soil confident that they were not displacing any defendable civilization.
It is remarkable that even the most vociferous critics of colonial projects have not sought to create their own eco-systems choosing to inherit the very systems that were created to advance the ideas of settlers which ideas were and continue to be misunderstood to this day.
Although in terms of the eco-system that was introduced by the settlers, human beings (with the exception of natives), acquired legal personhoods when they were born, it was also the case that even the founding fathers of America saw it fit to exclude slaves in the project simply because they regarded a man clothed with no shared ideals and aspirations as less of a human being than they were. A slave was deemed to be an incomplete legal person and as such was given a weighting of 60% of a complete legal person. Through this construction, it was possible to exclude blacks from exercising the rights as enshrined in the constitution.
With respect to juridical persons, they acquire legal personhood when they are incorporated in accordance with the law. Such persons are issued with a birth certificate in the form of registration papers that form part of the corporate population register in any country. To the extent that the idea of corporate institutions did not originate in Africa, we are compelled to improve our collective corporate literacy in order to respond creatively to what we consider to be the injury caused by visitors from other continents.
Some of the examples of juridical persons include:
Corporations being bodies corporate created by statute or charter. This creature exists in many forms including: corporation sole being a corporation constituted by a single member, and that individual’s successors in the same capacity, in order that the successors can step into the same shoes enjoying the same legal benefit or advantage especially in respect of perpetuity. A corporation aggregate is a corporation constituted by more than one member.
Municipal corporations (municipalities) are also creatures of statute.
Cooperatives (co-ops) are institutions created and operated by a group of like-minded individuals for their mutual benefit.
Unincorporated associations representing two or more persons coming together for a common purpose who then craft their own rules of engagement in the form of a constitution are also treated as juridical persons in many jurisdictions.
Partnerships are an aggregate of two or more persons established to carry on a business in common and created by agreement. Traditionally, however, partnerships did not have continuing legal personality but this has evolved in many jurisdictions to now permit them to be treated as having an independent legal personality.
Companies representing a form of business association that acts as vehicles for delivering the promise of services or goods to the market are often corporations that may take the following forms: unlimited companies, trusts, and funds as well as trade unions. It is also includes limited liability entities that can be private companies limited by guarantee, by shares or public limited companies that take the form of entities having certain characteristics of both a corporation and a partnership.
Sovereign states are also legal persons yet in the minds of many people an assumption is made that governments are real persons.
It is also the case that supranational organisations like the Africa Union, the UN, and many others possess legal personalities.
Even temples, in some legal systems, also have separate legal personality.
It is important to highlight that even the President of a sovereign state possesses no legal personality in his or her own right as he or she has no ability to exercise legal rights independent of the political body or state institution which he or she is a part of.
The debates around the idea of corporate personhood is not new to mankind. Over the past more than 200 years, scholars and non-scholars have considered what corporate personhood means and entails.
However, in Africa’s post-colonial era, it is often the case that brightest minds in the continent are rarely concerned about these kind of debates as it is convenient to debate personalities and their failings rather than delve into the philosophical issues that in turn are critical in moving the African condition and possibilities to better levels.
The debate on the idea of corporate personhood has paid dividends in that it has resulted in numerous theories about corporate personhood that have come into and out of favour over the years, including the “artificial person” theory, the “contractual” theory, the “real entity” theory, and the “new contractual” theory.
This business class is also intended to expose the various functions of corporate personhood including four functions being: (1) providing continuity and a clear line of succession in property and contract, (2) providing an “identifiable persona” to serve as a central actor in carrying out the business activity, (3) providing a mechanism for separating pools of assets belonging to the corporation from those belonging to the individuals participating in the enterprise, and (4) providing a framework for self-governance of certain business or commercial activity.
The development of Africa’s corporate personhood has been regrettably linked to colonialism thereby reducing the appetite to understand the idea and its evolution as well as its true societal power. The corporate persona is not only desirable but critically important as it is the case that corporations like governments are not simply vehicles for delivering promises and the sum of their parts but actually have carved niches in the world of humans where it is now customary to view corporations as real persons with separate and distinct personalities and characters from the actors involved.
A government is nothing but an artificial person yet ordinary people in the majority believe in its power to advance human interests even in some cases to bring food to the people. Any literate person would find the idea that a government can ameliorate the pains of life foolish simply because its true purpose could hardly have been to substitute the creativity and innovation of the human mind but to secure an environment in which the mind can express itself openly and transparently in the service of mankind.
It is individuals who hold the promise to make things happen and artificial persons like governments and corporations only become alive through the choices and actions of the people who use them. It is the case that a foolish person elected into state office cannot cure such foolishness through elections. An idiot will always be an idiot but the true role of institutions is to allow the self-interested individuals to add value to the human experience through acting on their stages.
Governments are ultimately instruments for legally robbing the income generators and using the income to distribute it to those less fortunate and finance the activities aimed at serving citizens. It is not the purpose of state actors to lead but to follow yet it is the case that the propensity to use the platform of government to abuse the people it is intended for is high where ignorance is prevalent.
Like a corporation, a government is just an instrument to be used by citizens to regulate their affairs. It is also not unexpected that humans often want someone and something to replace their personal inadequacies. Like a human being, a legal person cannot create itself but has to be given life to by its parents. The ultimate parents of any corporation have to be natural persons who either directly or indirectly become the holders of shares in the corporation. The relationship between a holder of shares and the legal person concerned is not that of an owner to the owned.
In the human world, parents do not have an ownership relationship with their children. The children once born have their own rights and obligations. It is the case that in the world of humans, it is unthinkable to have a human being without relationships. In the world of legal personas, relationships between corporate entities also follow the same lines of family trees.
Corporations that find themselves in a web of corporate relationships either through shareholdings or through supply value chains tend to succeed than those that operate on a pipeline and not platform basis. Human beings often delude themselves that self-employment or independence is the way to go but the reality of the human experience is that inter-dependence based on exchange of value is the sustainable way to go.
I have often heard people saying that: “I want to work for myself.”  Although this may make sense, one would soon realize that more can be done using corporations because such vehicles can aggregate knowledge and financial power, both ingredients for supply value chain optimization strategies.
I have often made the point that the USA is the last known human experiment that involved migrants investing in an idea that spoke to a diverse constituency. The USA was founded as a legal person whose genius lay in the idea that the human actor when exposed to freedom and the rule of law has the capacity to innovate and create in an extraordinary manner.
The idea’s power and potency was in the acceptance that human civilization must necessarily be premised on certain and fundamental self-evident truths among them that human beings are created equal and endowed only by the creator with certain inalienable rights including life, liberty and pursuit of happiness.
Is it not ironic that the output of only 300 million Americans in a year exceeds the output of 1 billion Africans yet we all have the same privilege to use the donated 24 hours in a day? Americans do not have any extra hours in day given to them by the creator but are able to optimally use the time to advance their interests.
When we look at the wealth of nations as manifested through individuals, we cannot be blind to the impact and consequences of ideas that speak to the human spirit including the idea of a corporate personality. Africa’s promise is hidden in the ignorance or illiteracy of its peoples on what matters to the human spirit.
If you find the above of interest, please join us at NIBCA www.nibcaportal.org, not-for-profit and non-partisan association of members established to promote awareness of the role of business in building societies that work for all.
NIBCA stands for the National Independent Business Correspondents Associations (NIBCA) an organisation established in terms of the laws of South Africa as a platform for members to share experiences, knowledge, ideas and insights into the supply value chain system and how plugging into the system can add value to the enterprise of life.