Law Commons^™

Before Competition: Origins Of The Internal Affairs Doctrine, Frederick Tung

Faculty Scholarship

To the modern corporate scholar and lawyer, the internal affairs doctrine seems in the natural order ofthings. Corporate law is state law. Each corporation is formed under the law of its chosen state ofincorporation. To ensure consistency and predictability, that law must govern the corporation's internalaffairs. Yet the origin of such a doctrine is puzzling. Respecting the firm's choice of corporate law, thedoctrine forces state legislatures into competition to attract incorporations. But how did legislatures come to concede their traditional territorial regulatory authority, and instead agree to compete? This Article solves this puzzle, offering the first account of the doctrine's …