Purpose of a Corporation · Section 6

Section 5 of 9

What the law actually says today

2025 snapshot

Long-form source as of MAY 28, 2026

The operative regime today is a quadrant, organized along two axes: the decisional posture (clear-day operating decisions versus sale-of-control or controlled-shareholder transactions) and the corporate form (ordinary for-profit corporation versus statutory benefit corporation).29

Figure 3

When the law lets directors consider stakeholders, and when it does not.
Decisional posture Clear-day operating decisions Sale-of-control / controlled-shareholder Corporate form Ordinary for-profit Benefit corporation Permissive Business-judgment zone Directors may consider employees, customers, suppliers, communities, environment, and reputation as part of a rational long-term stockholder-welfare strategy. Shlensky v. Wrigley (1968); A.P. Smith (1953). eBay Domestic Holdings v. Newmark (2010) — cautions against treating mission as an independent end (Chandler, Ch.). Stakeholder interest is doctrinally a means, not Stockholder-only Revlon zone Once breakup or change of control is inevitable, the board's duty becomes maximizing immediate stockholder value. Revlon v. MacAndrews & Forbes (1986). (eBay v. Newmark sits in the clear-day cell → it cautions against mission-as-independent-end in an ordinary Delaware corp, not Revlon.) Stakeholder interest enters only as a rationally related stockholder-benefit input. Balancing Statutory pluralism Directors must balance stockholders' pecuniary interests, the interests of those materially affected by the corporation's conduct, and the specific public benefit identified in the certificate. 8 Del. C. §§ 362, 365; Tex. Bus. Org. Code §§ 21.951–.959. Contested PBC sale-of-control The § 365 balancing duty extends in terms to change-of-control transactions, but no binding Delaware Supreme Court precedent has yet resolved the interaction with Revlon. PBC is opt-in. 8 Del. C. § 365(a); Frederick Alexander & al. (2024).

Doctrinal authorities: Shlensky v. Wrigley, 237 N.E.2d 776 (Ill. App. Ct. 1968); A.P. Smith Mfg. v. Barlow, 98 A.2d 581 (N.J. 1953); Revlon v. MacAndrews & Forbes Holdings, 506 A.2d 173, 182 (Del. 1986); eBay Domestic Holdings, Inc. v. Newmark, 16 A.3d 1 (Del. Ch. 2010); Del. Code Ann. tit. 8, §§ 362, 365 (2024); Tex. Bus. Org. Code Ann. §§ 21.951–.959 (2024). The bottom-right cell reports a contested doctrinal question: § 365(a)'s balancing duty extends in terms to change-of-control transactions, but no binding Delaware Supreme Court precedent has yet resolved how the PBC balancing duty interacts with the Revlon regime.

The boundary between the green cells and the red cell is what Chancellor Chandler made textual in eBay Domestic Holdings, Inc. v. Newmark. Confronted with controlling shareholders who had structured a defensive rights plan to protect craigslist's stated “public-service” orientation against a minority stockholder's pursuit of an investment return, the Court of Chancery wrote:

Having chosen a for-profit corporate form, the craigslist directors are bound by the fiduciary duties and standards that accompany that form. Those standards include acting to promote the value of the corporation for the benefit of its stockholders. The “Inc.” after the company name has to mean at least that. eBay Domestic Holdings, Inc. v. Newmark, 16 A.3d 1, 34 (Del. Ch. 2010) (Chandler, Ch.).30

The form-specificity of the holding is the doctrinal core of the contemporary regime. Stakeholderism as an independent fiduciary end requires a different legal architecture: the public benefit corporation in Delaware and Texas, or a constituency statute in one of the thirty-three states surveyed in the next section.

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