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Judicial dissolution, sometimes called the corporate death penalty, is a legal procedure in which a corporation is forced to dissolve or cease to exist. Dissolution is the revocation of a corporation's charter for significant harm to society. In some countries, there are
corporate manslaughter Corporate manslaughter is a crime in several jurisdictions, including England and Wales and Hong Kong. It enables a corporation to be punished and censured for culpable conduct that leads to a person's death. This extends beyond any compensation t ...
laws; however, almost all countries enable the revocation of a corporate charter. There have been numerous calls in the literature for a "corporate death penalty". Most recently a study argued that industries that kill more people each year than they employ should have an industry-wide corporate death penalty. Some legal analysis has been done on the idea to revoke corporate charters for environmental violations such as for severe
environmental pollution Pollution is the introduction of contaminants into the natural environment that cause adverse change. Pollution can take the form of any substance (solid, liquid, or gas) or energy (such as radioactivity, heat, sound, or light). Pollutants, the ...
. Actual judicial dissolutions in the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territo ...
are rare. For example, Markoff has shown that no publicly traded company failed because of a criminal conviction that occurred between 2001 and 2010. Companies suggested as deserving the corporate death penalty include Eli Lilly & Company,
Equifax Equifax Inc. is an American multinational consumer credit reporting agency headquartered in Atlanta, Georgia and is one of the three largest consumer credit reporting agencies, along with Experian and TransUnion (together known as the "Big Th ...
,
Unocal Corporation Union Oil Company of California, and its holding company Unocal Corporation, together known as Unocal was a major petroleum explorer and marketer in the late 19th century, through the 20th century, and into the early 21st century. It was headqu ...
, and
Wells Fargo Wells Fargo & Company is an American multinational financial services company with corporate headquarters in San Francisco, California; operational headquarters in Manhattan; and managerial offices throughout the United States and inter ...
. "If
Volkswagen Volkswagen (),English: , . abbreviated as VW (), is a German motor vehicle manufacturer headquartered in Wolfsburg, Lower Saxony, Germany. Founded in 1937 by the German Labour Front under the Nazi Party and revived into a global brand post- ...
or other examples in this volume were forced out of existence, this would send a message", John Hulpke wrote in the ''Journal of Management Inquiry'' in 2017. One argument against its use is that otherwise innocent employees and shareholders will lose money or their jobs. But author David Dayen argues in ''
The New Republic ''The New Republic'' is an American magazine of commentary on politics, contemporary culture, and the arts. Founded in 1914 by several leaders of the progressive movement, it attempted to find a balance between "a liberalism centered in hum ...
'' that "the risk of a corporate death penalty should inspire active governance practices to protect their investments".


Historical examples

In 1890, New York's highest court revoked the charter of the North River Sugar Refining Corporation on the grounds that it was abusing its powers as a monopoly. In 2022, New York Supreme Court Judge Joel M. Cohen rejected a move by the state's Attorney General to dissolve the
National Rifle Association of America The National Rifle Association of America (NRA) is a gun rights advocacy group based in the United States. Founded in 1871 to advance rifle marksmanship, the modern NRA has become a prominent gun rights lobbying organization while contin ...
. According to ''
The Wall Street Journal ''The Wall Street Journal'' is an American business-focused, international daily newspaper based in New York City, with international editions also available in Chinese and Japanese. The ''Journal'', along with its Asian editions, is published ...
'', "the state's allegations of corruption and mismanagement by NRA top officials fell short of the public harm required to impose the 'corporate death penalty' on the nonprofit group".


See also

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Corporate crime In criminology, corporate crime refers to crimes committed either by a corporation (i.e., a business entity having a separate legal personality from the natural persons that manage its activities), or by individuals acting on behalf of a corpor ...
*
Capital punishment Capital punishment, also known as the death penalty, is the state-sanctioned practice of deliberately killing a person as a punishment for an actual or supposed crime, usually following an authorized, rule-governed process to conclude that t ...


References

{{Reflist Anti-corporate activism Criminology Problems in business economics United States corporate law