Investor personhood: the case against paternalism and welfarism in corporate law

Abstract

Equity investment is seen in both dominant and critical corporate law literature as a passive act that carries exclusively instrumental value. This conceptualisation legitimises shareholder paternalism in current UK law and provides support for stakeholder welfarism reforms. Engaging with cogent emerging evidence on the preferences, motivation, and behaviour of contemporary individual investors, we demonstrate that, for the majority of them, equity investment is increasingly experienced as a choice instantiating their personhood, identity, and moral agency, and thus carrying inherent value. Drawing on Hayek's epistemology, we propose a novel interpretation of Rawls's theory of justice, and argue that freedom to own productive property must be included in the list of basic liberties under Rawls's first principle of justice. Therefore, corporate law cannot continue imposing paternalistic restrictions on the configurations of shareholder rights that investors may rationally choose from, and pleas for stakeholder welfarism within corporate law must be rejected.