One of the fundamental principles of the law of business associations is that a corporation is considered, under the law, to be a person albeit an artificial one. For most of the history of the nation what the idea of a corporation having “personhood” was mainly for use as a means of protecting the liability of the corporation’s owners, namely its investors, from the debts and obligations of the company. Over the last decade, however, corporations have increasingly been found to be or share some of the same rights and privileges as natural, as opposed to legal, person that were previously considered to define what it is to be a human being.
In the 2010 case Citizens United v. Federal Election Commission, the Supreme Court held that corporations have a First Amendment right to make contributions to political ads and other media communications of the political candidate of the corporations choice (Citizens United v. FEC, 2010). Under the Court’s reasoning, the First Amendment the government is prohibited from censoring political speech, and political speech is deemed to include the financing that allows anyone to free discuss their political views. For the Court, “anyone” must include corporations because a corporation is nothing more than an association or groups of human beings. Accordingly, barring a corporation was the equivalent of barring a group of people from enjoying their right the association and speech. The Court, however, required that ads and other media that accept contributions from corporation need to disclose which corporations gave money. As the Court sees it, this provides essential information to voters in understanding the background of a particular political ad or media content.
In the 2014 case Burwell v. Hobby Lobby Stores, Inc., the Supreme Court extended the constitutional rights of a corporation even further when it held that corporations are allowed to deny their employees federally mandated medical insurance coverage if such coverage violated one of the corporation’s religious beliefs, such as contraception (Burwell v. Hobby Lobby Stores, 2014). In issuing their decision, the Court found that because corporation are nothing but groups of individual human beings the created the corporation for a specific purpose, forcing the corporation to do something that the owners object to on religious grounds is equivalent to forcing the owners personally to violated their religious belief which is unconstitutional under the First Amendment’s Free Exercise Clause.
Despite the Supreme Court’s recent efforts to expand the personhood of corporations, the regulatory framework of the private sector, nevertheless provides a number of obstacles to the accelerated development of a business. This is especially true in firms that rely or were founded through innovative entrepreneurship. The technology sector provides an illustrative example. Currently, one of the more popular trends in technology is encryption. Encryption allows users to store information, block access, or communicate with one another in a manner that is impossible or nearly impossible for third parties, such as law enforcement, to access. Originally, there was not regulatory framework that focused on encryption, which allowed innovation companies to provide the service to customers as a way of differentiating themselves. However, as the government has increasing found encryption to be a problem to their efforts to protect and serve the community, more and more effort is being expressed to control or roll-back encryption. Consequently, those companies that “moved first” to supply encryption services, may potentially have to scale-back or eliminate those services depending on how the state decides to deal with encryption. In other words, if a company is too innovative, there is always the potential that their innovation will eventually be deemed illegal by the state. Such circumstance would most likely hurt entrepreneurs and decrease any benefits that they might be otherwise able to enjoy through innovation.
References
Burwell v. Hobby Lobby Stores, Inc., 134 S.Ct. 2751 (2014). Retrieved from http://www.supremecourt.gov/opinionms/13pdf/13-354_olp1.pdf
Citizens United v. Federal Elections Commission, 558 U.S. 310 (2010). Retrieved from https://supreme.justia.com/cases/federal/us/558/08-205/opinion.html
