No Shareholders or Stakeholders

The commons corporation must have no shareholders. This is primarily for two reasons. First, shareholders typically demand that a corporation maximize profits, which would conflict with the missions of both the commons corporation and the subsidiary. For example, the commons corporation may focus on providing the maximum possible domestic benefits to workers, while shareholders might push for reducing these benefits to increase profits. The subsidiary requires flexibility in wage payments. For instance, the subsidiary might need to offer premium wages or profit-sharing options to attract and retain skilled workers, ensuring competitiveness in the job market. Therefore, the subsidiary entity only needs to generate reasonable net profits to fulfill its business function, rather than striving for the highest possible profits. This ensures that both entities can achieve their respective goals without interference.

Second, the corporation must be insulated from shareholder lawsuits. Shareholders could bring a variety of lawsuits against the commons corporation, including suits for breach of fiduciary duty, violation of shareholders’ rights, derivative actions, and unfair mergers and acquisitions. For example, shareholders might sue for breach of fiduciary duty if they believe the corporation’s directors are not acting in the best interest of the corporation. They might file a lawsuit for violation of shareholders’ rights if they feel their voting rights or ownership interests have been unfairly disregarded. Derivative actions could arise if shareholders believe the management’s actions are harming the corporation, and they sue on behalf of the corporation to rectify the situation. Unfair mergers and acquisitions could lead to lawsuits if shareholders feel that the terms of a merger or acquisition are not equitable.

These lawsuits would frustrate the intentions of the commons corporation, which aims to distribute the net profits as wages and maximize the payment of social benefits to workers. For instance, legal battles could drain financial resources that would otherwise be used for domestic programs. Additionally, the commons corporation’s goal of acquiring capitalist companies to bring their workers under the umbrella of Commons Capitalism could be hindered if resources and attention are diverted to defending against shareholder lawsuits. Therefore, insulating the corporation from such legal actions is crucial to preserving its mission and objectives.

Therefore, the only way for the commons corporation to avoid having shareholders or stakeholders is to incorporate as a nonprofit corporation without members. For example, by choosing this structure, the commons corporation can focus solely on maximizing social benefits for workers without the pressure of generating profits for shareholders. Table 1 under the Research provides a comprehensive list of all fifty states and the District of Columbia, indicating where a nonprofit corporation can be organized. Specifically, the table highlights the states where an organized nonprofit corporation must have members. These states include Delaware, Kansas, Louisiana, Maryland, New York, Ohio, and Oklahoma. This information is crucial for determining the most suitable state for incorporating a member-free nonprofit corporation.
This setup ensures that the commons corporation can prioritize its social mission, such as providing social benefits, without the conflicting interests of shareholders demanding financial returns.

Furthermore, the commons corporation must not have stakeholders. One of its primary goals is for its subsidiary entity to pay wages and the commons corporation to provide domestic benefits to current workers. These workers might assert they are stakeholders in the CCE, claiming they deserve a substantial share─if not all─of the net profits for their own benefit. For instance, current employees might argue that since they’re actively contributing to the company, they should receive additional profits beyond their wages.
However, the CCE also has a responsibility to use its net profits to fund domestic benefits for past workers and to acquire capitalist companies. Imagine a scenario where the corporation wants to support retired employees who’ve dedicated years to the organization or invest in purchasing a company that advances their mission. If the net profits are entirely allocated to current workers, these objectives can’t be met.

Therefore, it’s crucial that the charter of the commons corporation explicitly states that none of the workers─whether part of the commons corporation or its subsidiary entity─are beneficiaries of the CCE. This ensures that profits can be used to honor commitments to former employees and strategic acquisitions rather than being distributed to current staff as additional personal gain.

Structuring the commons corporation as a nonprofit entity without shareholders or stakeholders is crucial to fulfilling its mission without external interference. By explicitly stating in its charter that neither current nor subsidiary workers are beneficiaries of the CCE, the corporation can allocate net profits toward providing domestic benefits to past workers and acquiring capitalist companies. This setup eliminates potential legal challenges from shareholders and avoids conflicts of interest with stakeholders, ensuring that resources remain dedicated to maximizing social benefits and expanding the reach of Commons Capitalism. This clear legal framework allows the corporation to focus solely on its objectives, preserving its mission to enhance worker welfare without the pressures of profit maximization for external parties.

Separate Business Organizations

Separate business organizations must be formed for the commons corporation and the subsidiary entity of the CCE because each has a distinct mission. The commons corporation is primarily mission-driven, aiming to provide social benefits for workers. For example, it will focus on offering as many of the social benefits previously enumerated to maximize social benefits for the workforce. The subsidiary entity, in contrast, is primarily profit-driven and seeks to generate net profit for the CCE while ensuring competitive wages for its employees. These differing objectives necessitate separate operations and management to effectively fulfill their respective missions.

These differing goals lead to distinct strategies, decision-making processes, and measures of success. The commons corporation prioritizes social benefits. Meanwhile, the for-profit division focuses on market competitiveness and profitability. Consequently, it is essential for the commons corporation and the subsidiary entity to be independently operated by different management teams specialized in their respective areas. Nonprofit managers excel in maximizing social value, but they might lack the necessary business acumen and profit-oriented mindset required for running a successful commercial enterprise.

Therefore, the commons corporation mission should not guide the business mission of the subsidiary entity. Each must align its operations and strategies with its unique objectives to ensure effectiveness and sustainability.