Abstract

When legislatures alter corporate, partnership, and other business entity statutes, they simultaneously amend the governing document of all entities of that type formed within the jurisdiction. In many circumstances these business entities may wish to retain existing rules for internal governance. This Article offers a novel tool for firms wishing to so manage their own legal transitions: the "charter freeze." A freeze provision in the company charter declares that future (non-mandatory) changes in relevant statutes have no effect on the firm. Owners may affirmatively adopt the new rules, but choose to exercise complete control over their adoption vel non of legal innovation. This Article argues that current law permits a firm to adopt charter freezes and demonstrates situations in which freezes are socially desirable.

Document Type

Article

Publication Date

2000

Publication Information

79 North Carolina Law Review 111-155 (2000)

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