Scholars have long debated the merits and legitimacy of “corporate democracy.” But largely absent from the debate is what courts mean by “corporate democracy”– or at least how courts use the phrase. In a forthcoming article, I analyze the more than 250 judicial opinions across jurisdictions that deploy “corporate democracy” to understand how and when courts use it. My analysis shows that courts deploy this phrase when focusing on a narrow procedural core of corporate governance. Borrowing from democratic theory, this focus reflects something that approximates democratic minimalism inside the firm.

Setting aside just under 30 First Amendment cases that use this language to parrot Bellotti and Citizens United, most of the relevant cases involve classic corporate governance disputes. When courts use this language, they emphasize two principles that resemble key points of a minimalist theory of democracy: (1) director elections should be fair, and (2) shareholders hold certain fundamental and enforceable participation rights like voting, information, and litigation rights. Those two concepts suggest that courts see functioning corporate democracy as akin to democratic minimalism. Traditionally, democratic minimalism prioritizes competitive elections. Courts can uphold that commitment by protecting the democratic processes – through deference to the elected representatives (assuming fair and competitive elections) or, as some have suggested, by intervening in limited circumstances where the process itself is at stake. That conception of democracy manifests in many of these corporate governance cases, too – courts prioritize process over substance. They don’t account for more substantive preferences playing out behind procedural corporate decision-making.

For example, the phrase, “corporate democracy,” arises in cases involving preliminary, injunctive relief relating to annual corporate meetings (e.g., to make sure an annual meeting occurs as scheduled or to postpone it). When using this phrase, courts have underscored their focus on fair director elections to explain why challenged board actions – like efforts to alter the date of the annual meeting or even the proxy materials – are inequitable. For example, a court has explained how the action in question enables a type of entrenchment that runs counter to the type of fair (and competitive) election that the court expects and will use its power to ensure.

Other cases focus more broadly on shareholder participation. In other words, courts deploy “corporate democracy” to defend limited shareholder self-governance exercised not only through voting, but also through accessing information and litigating.

In many cases, courts evaluate the risk of shareholder disenfranchisement in the wake of certain board action. But like some visions of political democracy, court opinions recognize that voting is meaningful only when voters have access to information and the results can be enforced in court. For example, courts invoke this language when addressing shareholders’ statutory rights to inspect a company’s books and records. One court connected access to a shareholder list with shareholders’ ability to wage a successful proxy contest. In doing so, procedure rather than substance was the court’s focus. The court intervened to protect the possibility of communicating because of its centrality to electoral competition; it was demonstrating a commitment to something close to democratic minimalism. Courts have also invoked this phrase in federal securities cases when considering shareholders’ access to material information to cast a well-informed vote. And there is good reason to ask why courts at times use a similar frame for analyzing questions of information rights under both state corporate law and federal securities law.

Turning to judicial enforcement, Delaware courts and others exclude derivative suits from their conception of corporate democracy, treating them as an alternative to more direct corporate democracy that ensures board accountability. Courts have invoked the phrase and intervened when, absent their intervention, the democratic legitimacy of the shareholder vote or board action would be undermined or ignored. Courts appear to ask questions about the risk of shareholder disenfranchisement, board entrenchment, and the like based on alleged procedural irregularities.

By contrast, courts do not invoke “corporate democracy” as an excuse to wade into substantive concerns or for judicial activism. In fact, there are instances where courts have been very thoughtful about “corporate democracy” and what it requires and then ultimately decided not to grant the requested relief.

Taken together, the instances where case law invokes “corporate democracy” suggest an essential core of the corporate form and an approximation of democratic minimalism inside the firm. In other words, courts’ understanding of corporate democracy is fundamentally procedural rather than substantive. Accordingly, “corporate democracy” carries potential doctrinal significance and deviates from how corporate scholars use the language. Namely, the courts’ conception is not divorced from shareholder power, but it limits shareholder power to procedure, focusing on fair and competitive director elections and limited shareholder self-governance. Notably absent are more expansive conceptions of shareholder or stakeholder power (i.e., governance reforms that aggregate more preferences within the firm in reaching business decisions). Corporate scholarship, however, often uses “corporate democracy” as shorthand for the reforms that would aggregate more preferences within the firm (whether those of shareholders or, in some instances, other stakeholders), thereby reflecting a more pluralist conception of democracy. This judicial-scholarship divergence, even if unsurprising given the different questions courts and scholars confront, is significant for the debate about what corporate democracy could or should look like. To the extent scholars and lawyers are dissatisfied with the narrower judicial conception, an important first step is persuading courts to revise their conception of corporate democracy.

My case analysis reveals how, when, and why courts, as adjudicators of corporate disputes and enforcers of corporate law, invoke “corporate democracy.” For courts, “corporate democracy” reflects a narrow and procedural vision of democracy, focused on the integrity of director elections and limited shareholder self-governance. Examining these cases further would reveal the reach of the courts’ conception of corporate democracy and what it might mean for corporate governance more broadly, including what it would mean to make corporate governance more “democratic.”

Ashlee Paxton-Turner is a visiting assistant professor at Duke University School of Law. This post is based on her forthcoming article, “‘Corporate Democracy’ in Case Law,” available here.