Право і безпека (Jun 2024)
Recognition of the “membership” criterion as the only one for qualification of corporate relations: problematic aspects
Abstract
The current law enforcement practice shows that a single criterion (“membership in a legal entity”) is not sufficient to qualify the existence of corporate relations in a legal entity. The reason for this is that the fact of membership does not always give rise to legal, but mainly civil law consequences that directly arise from the membership relationship to involve a person in it. Therefore, the concept of membership does not have the necessary civil law content, is not the only feature of a corporation (in the sense of a company) in civil law, and cannot be considered the only qualifying feature of corporate relations. It has been proved that the categories of “participation”, “membership” and “cooperation” are not synonymous with basic civil law concepts which indicate an independent feature of a separate group of relations specifically and independently regulated by civil law. These categories should be considered a characteristic of an entity's belonging to a certain community, which does not mean that it has all the features of a corporation as a legal entity. The article argues that the characteristic features which establish the specifics of a corporate organisation within the structure of a legal entity are: 1) division of the authorised capital into shares (stocks), which are recognised as a form of fixation of corporate rights and obligations; 2) existence of relations of participation in the management of such an organisation. The essence of participation in the management of a corporation and membership in it is actually the same thing. The main criterion for a corporation is whether there is participation (membership), and, as a result, whether those who created it (participants, shareholders, members) participate in the management of the legal entity. The authorised capital is important only as an indicator for determining the management procedure i.e. how many votes a participant (shareholder, member) has.
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