GOVERNMENT AND CORPORATE GOVERNANCE (I)

For Hobbes, it is certain that there must be a sovereign

According to Thomas Hobbes we all have natural passions that carry us to, among other things, partiality, pride, and revenge. The laws of nature, as Hobbes sees them, including ‘justice’, ‘equity’, ‘modesty’, and ‘mercy’, are contrary to our passions. Therefore, we will only observe the laws of nature if we have fear of some power to cause them to be observed. According to him, covenants, without the sword, are but words that lack every strength to protect a person.

See Thomas Hobbes, Leviathan, Amsterdam: Boom 2007, p. 207 and further.

For Hobbes, it is certain that there must be a ‘mortal god’, a sovereign, for whom fear exists, and who can enforce peace and security. If everyone (or at least the majority) transfers one’s right of governing oneself to only one such person (or assembly of persons) then a ‘civitas’, a state, is created. Within that state, a sovereign has absolute power: he is the one who determines everything, makes up the rules and can do no wrong. Hobbes goes on to argue: “However, he himself is not subordinate to the laws made by the sovereign, or in other words, by the state itself” (p. 293).

Of course, this is an appealing point of view for the sovereign. I would think that the rules issued by the state (government) itself, must be correctly and strictly observed by that same state. It cannot be well conceived that, for example, the police and Public Prosecutor’s Office (as ‘instruments’ of the state) would be allowed to violate the law with impunity, can it?

As this short introduction shows, there may be very different opinions about the nature and the role of the state. Today’s topic then concerns the question of how we should look at government-owned companies and in particular the influence of the government on these companies. I will leave the category of government-owned foundations undiscussed here.

It will probably hold for most of the government-owned companies that their activities originally belonged to the regular governmental duties. At some point in time, these activities have apparently been (stronger) grouped organization-wise and a certain unity and coherence was introduced therein, often a legal spin-off came about, which was most clearly apparent when these activities were incorporated in a publicly held company (N.V.).

J. van den Noort, ‘De verrassend veelzijdige geschiedenis van overheidsbedrijven’ [The surprisingly multifaceted history of government-owned companies], in: Historische Bedrijfsarchieven Openbare Nuts- en Communicatiebedrijven. [Historical Company Archives Public Utility and Communication companies] Een geschiedenis en bronnenoverzicht [A history and list of sources], Amsterdam 1993, p. 13-70.

(To be continued)

Karel Frielink
Attorney (Lawyer) / Partner

(24 May 2012)

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22 January 2013

See: Corporate Governance and Directors’ Duties: Curacao. A Q&A guide to corporate governance law in Curacao. The Q&A by Maike Bergervoet and Karel Frielink gives a high level overview of board composition, the comply or explain approach, management rules and authority, directors’ duties and liabilities, transactions with directors and conflicts, company meetings, internal controls, accounts and audit, institutional investors and reform proposals. The Q&A is part of the PLC multi-jurisdictional guide to corporate governance law.

See: Government-owned companies: ensuring good corporate governance in Curacao. This article by Maike Bergervoet and Karel Frielink discusses the corporate governance provisions in Curacao for government-owned companies, analysing both the internationally applicable regulations provided by the OECD in their Guidelines on Corporate Governance of State-owned Enterprises, and the domestic provisions laid down in the National Ordinance, the Corporate Governance Code and the Model Articles of Association. This article is part of the PLC multi-jurisdictional guide to corporate governance law.

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24
May 2012
CATEGORY

Corporate

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