Judicial dissolution


Judicial dissolution, sometimes called the "corporate death penalty", is a legal procedure in which a corporation is forced to dissolve or cease to exist.
A "corporate death penalty” is the revocation of a corporation's charter for significant harm caused towards society. In some countries there are corporate manslaughter laws, however, almost all countries enable the revocation of a corporate charter. There have been numerous calls in the literature for a "corporate death penalty". Most recently a study argued that industries that kill more people each year than they employ should have an industry-wide corporate death penalty. Some legal analysis has been done on the idea to revoke corporate charters for environmental violations such as for severe environmental pollution. Actual corporate death penalties in the United States are rarely used. For example, Markoff has shown that no publicly traded company failed because of a conviction that occurred between 2001 and 2010.
Companies suggested as deserving the corporate death penalty include Eli Lilly & Company, Equifax, Unocal Corporation, and Wells Fargo. "If Volkswagen or other examples in this volume were forced out of existence, this would send a message," John Hulpke wrote in the Journal of Management Inquiry in 2017.
One argument against its use is that otherwise innocent employees and shareholders will lose money or their jobs. But author David Dayen argues in The New Republic that "the risk of a corporate death penalty should inspire active governance practices to protect their investments."

Historical Examples

In 1890, New York's highest court revoked the charter of the North River Sugar Refining Corporation on the grounds that it was abusing its powers as a monopoly.