INTERNAL-AFFAIRS DOCTRINE

internal-affairs doctrine.Conflict of laws. The rule that in disputes involving a corporation and its relationships with its shareholders, directors, officers, or agents, the law to be applied is the law of the state of incorporation. • This doctrine applies in the majority of states. In a few states, notably California and New York, foreign corporations must meet state-law requirements in specified circumstances. [Cases: Corporations 640. C.J.S. Corporations §§ 893, 900.]

“Broadly speaking, ‘corporate internal affairs’ refers to the powers and obligations of a corporation’s manager vis-a-vis the corporation and its shareholders, and the rights and duties of the corporation’s shareholders vis-a-vis the corporation, its management and the other shareholders. Put differently, corporate internal affairs pretty much encompass the subject matter of those state laws typically referred to as corporate law. In dealing with a corporation’s internal affairs, courts … have looked to the law of the state of incorporation for the governing rule. Courts often refer to this choice of law principle as the ‘internal affairs doctrine.’ ” Franklin A. Gevurtz, Corporation Law 36 (2000).

[Blacks Law 8th]