Life (at least for company lawyers) without Salomon's case seems inconceivable. It is generally seen as a landmark decision. Every British and Australian company law textbook refers to it as a key case in the development of company law. The story of Salomon's case is, in fact, so well ingrained in our sensibilities that we all “know” (or at least think we do) the story of the unravelling of modern company law and the crucial role the decision by the House of Lords in Salomon v Salomon & Co Ltd plays in that story. We know the script so well that questioning the iconic status of Salomon's case would seem to be a ludicrous exercise. Despite the seeming futility of such an exercise it is the intention of this paper to suggest that re-examining some of our unquestioned assumptions may lead to some useful insights into the development of “modern” company law, and by inference, into a number of the problems (both theoretical and practical) facing contemporary corporations law academics and practitioners.

British business in the second half of the nineteenth century was characterised by the continued predominance of small private firms at a time when competing nations such as Germany and the United States were more commonly embracing large corporations. Alfred Chandler has contrasted personal capitalism in Britain with competitive managerial capitalism in America and attributes the alleged poor performance of British business and, through it, national rates of economic growth to the uncompetitive small family firm. Applying internalisation and transaction cost analysis he argues that such firms failed to achieve economies of scale and scope or to develop sophisticated administrative hierarchies managed by tiers of professional executives, features increasingly common in America by the end of the nineteenth century. An alternative tradition has used the economics of information and the networks paradigm to argue for the benefits of small-scale cooperative capitalism in both Britain and Japan.

It was never intended that the company to be constituted should consist of one substantial person and six mere dummies.

The robust affirmation of separate corporate personality by the House of Lords in Salomon is in sharp contrast to the fragile legal personality possessed by Mrs Salomon in 1897. In corporate law discourse Salomon v Salomon & Co Ltd is portrayed as the first case about the “one person company”. The case has given rise to considerable debate about the recognition of corporate personality where the corporation is the alter ego of a human person. In fact the portrayal of A. Salomon & Co Ltd as the alter ego of Aron Salomon is misleading because the company was a family company. The subscribers to the memorandum, described by Lopes LJ in the above quote as “six mere dummies” were Aron Salomon's wife and five children who were active participants in the company.

One of Aesop's fables tells the story of a war between the Birds and the Beasts, and the problems which this posed for the Bat. Whilst sharing characteristics in common with each set of protagonists, the Bat nevertheless did not belong to either side. Unfortunately this subtlety was not noticed by the warring parties'who each dismissed the Bat as an enemy. This image of the Bat's difficult position captures what I am attempting to do in this article. I examine the debate (“war” is too strong a word for it) between the two dominant justificatory theories of corporate governance and regulation in Australian corporate jurisprudence—the concession theory and the contract-based theories. I argue that although this debate has offered some important insights, ultimately it has proved to be either too simplistic (offering one-dimensional pictures of corporate life) or too restrictive (limiting our conception of how corporate governance and regulation might be improved). I sketch out an alternative justificatory theory which I call “corporate constitutionalism”.

This article considers the impact of the doctrine of legal personality as enunciated in the classic corporate law case, Salomon v Salomon & Co Ltd, on our theories concerning the role of the membership within a corporation, in particular the role of the membership within a university corporation.

Universities live on the edge of corporate law. Although it has been one hundred years since the judgment in Salomon's case, the ground rules of university governance were established well before that judgment. Furthermore, Salomon's case involved a one-man company organised under the Companies Act 1862 (UK) and universities are not typically organised under business incorporation statutes. Nevertheless, Salomon's case has had a dramatic effect on the way we view the constitutional structure of all corporations, including university corporations.

This article advances a new legal theory of the corporation—the “dual view” theory of the corporation. The theory states that the corporation must be explained in two different ways. First, the corporation must be explained internally to the law, as a legal category which acts as a trigger for the application of a set of legal rules. This “inner view” of the corporation says much about the function of the category within the legal system, but very little about why this category was designed to operate in this way. The inner view cannot explain the functions fulfilled by the category in the external world. To gain knowledge of the latter, one must adopt a second view-point, the “outer view”. The corporation must be explained as a legal artefact which facilitates the coordination of social action, whether this be in the economic system, the political system or indeed smaller systems of interaction such as the family.