The issue of governing a state like a corporation has been under hot discussion since the 1980s to criticize the states’ economic policies and encourage privatizations. Yet it never loses popularity with the involvement of business people like the former president of the US, Donald J. Trump, in the state administration, who still intends to run for president in the 2024 elections.
There are many distinctions in the solution to this issue, such as the differences between macro-economics and micro-economics and the fact that corporations are commercial profit organizations and states are political organizations that aim at the security and well-being of their citizens.
However, let’s put all these political and economic debates aside and look at the issue from a legal perspective. Let’s suppose a state is a corporation.
Who would be the owner, thus shareholders of this corporation? Of course, citizens! Because I want to believe that feudalism and empires no longer exist!
So, what kind of a corporation would this be? Since it would have millions of shareholders, it would be a 100% public joint-stock corporation.
If so, then how would such a corporation be run?
Under Turkish law, a board of directors would run such a corporation. The corporate articles would define their duties and powers and the powers not delegated by the shareholders. Only the shareholders could change the corporate articles, and they would also elect the board of directors. Board members would be adults who can act rationally and have the necessary education, knowledge, and experience to perform their duties. Their term of office would be limited to three years, and shareholders could always dismiss them before the end of their period or re-elect them at the end.
There would be independent, non-executive board members who would be qualified to perform their duties regardless of any influence. Moreover, it would be of utmost importance to separate the powers of the chairman of the board and the chief executive officer, and no one would be granted unlimited decision-making authority.
Board members would be obliged to perform their duties with the care of a prudent manager, be meticulous in the early detection and management of risks, and protect the corporation’s interests with integrity. They could not participate in the negotiations on matters where the personal interests of themselves, their families, or relatives conflicted with the interests of the corporation. Similarly, they could not transact with the corporation, compete with it, or sell a significant amount of corporate assets without taking the shareholders’ authorization. They would treat the shareholders equally on equal terms and facilitate the exercise of their shareholding rights, particularly the right to information and inspection and the right to vote.
When the shareholders believed that a board of directors’ resolution violated their rights or usurped their authorities, they could file a lawsuit to establish the invalidity of this resolution. If, on the other hand, the board members violated their obligations under the law or the corporate articles, they would be liable to both the corporation, the shareholders, and the corporation’s creditors, and they could be sued for damages.
Additionally, the board of directors’ activities would be subject to independent audit and submitted annually for the shareholders’ approval. Besides, the board of directors would launch a corporate website, regularly publish information and records about the corporation on this website, and keep those available online for given periods.
Furthermore, the corporation would have a public disclosure policy, a human resources policy, a policy for stakeholders such as customers and suppliers, a donation and aid policy, and ethical rules. It would also prioritize human rights, social responsibility, and the fight against corruption in its activities.
Therefore, even if a state is governed like a corporation, it would have high management standards similar to public administration principles, such as those in the European Governance White Paper. The representatives would not have unlimited powers, and any authority would be accompanied by transparency, accountability, and liability principles. As with all relationships and organizations that require acting on behalf of others!
Av. Müge Önal Başer, LL.M., LL.B.