Participation and property rights

This paper puts forward an argument for stakeholder rights. It begins by ex ploring two major answers to the question, 'in whose interests should the c ommercial company function?'. One claims parity for other stakeholders alon gside the shareholder on the basis of a theory of property rights, and anot her on a theory of citizenship. Each of these answers, it is argued, fail t o convince. The way forward is to recast the initial question, not asking i n whose interest the company should function, but which type of interest, p otentially located in any sort of person, might the company serve. That int erest is identified and distinguished from others that people affected by c orporations might have. These distinctions then provide the basis for an ar gument in favour of enfranchising two sorts of individual: sovereign stakeh olders, in charge of monitoring the formulation and revision of company obj ectives; and secondary stakeholders, who along with those in the first cate gory monitor the means used to achieve those objectives. The paper concludes that these distinctions should lead us to reconsider ot her elements in the corporate governance debate, such as the nature of a di rector's fiduciary duty; and the difference between democracy in corporatio ns and democracy in the wider society.