Can corporate officers, such as the CEO, legally be non-human? Or is there a legal requirement that they be human? For example, could a dog or an AI legally serve as CEO?
This question is relevant to:
and to:
Elon Musk: 'My dog is the CEO of Twitter' (BBC) (Yes, clearly it's a joke, but there's an ongoing discussion now about whether this joke could become real.)
Resolution
Resolves YES if a non-human can legally be CEO of a Delaware corporation. Resolves NO if not.
Resolves based on current law and case law as of April 14, 2023. I.e. this question asks whether a non-human could legally be CEO now. If a hypothetical advanced AI could legally be CEO now, that counts as YES. But if the law changes in 10 years to allow AIs to be CEO at that point in time, that doesn't count for this question.
If the answer is clear, based on discussion and analysis in the comments here, resolves as above.
If it is not clear, then resolution will proceed by the following procedure:
We (myself and any other interested market participants) will make a best effort to find information to answer the question, possibly by asking a lawyer or other expert to answer the question.
After enough time has passed without much new progress (roughly a couple weeks), I will conduct a poll asking users whether they believe the answer is YES or NO, and resolve to the proportion of YES votes. The poll will require responses to be honest. At my discretion, I may restrict the poll to badged users or to users who do not have a stake in the market.
Context
https://www.law.cornell.edu/wex/corporate_officers
Additionally, the corporate officers have a plethora of different rules and obligations related to the company. Again, these duties will depend on any applicable state or federal law, case law. For instance, corporate officers are generally considered fiduciaries. In short, this means there are three main duties that corporate officers take on: a duty of care, duty of loyalty, and duty of good faith.
This suggests that there is a legal requirement that corporate officers are human, because a non-human presumably cannot legally fulfill those requirements, today.
Note: I chose to ask about Delaware corporations because most US corporations are incorporated in Delaware. I am aware that Elon Musk's X corporation is a Nevada corporation. If you find out that the answer is different in Delaware vs Nevada, that would be very interesting, so please comment about it!
Summary of analysis in the comments
Radicalia points out that Delaware law says that Delaware directors have to be “natural persons” but that officers have to be just “persons.” https://danashultz.com/2016/11/01/corporate-officers-need-not-human-beings/. "So, although I have never seen this, in these states a legal entity, represented by one of its authorized officers, could serve as an officer of a corporation." This suggests that CEO, who is typically an officer, does not need to be a human, at least to fulfill this part of the law (perhaps other parts of the law do require them to be human). (Note: it is not clear whether the CEO is required to be an officer.)
A court would usually think that this use of different terms is intentional.
There are clear cases in which other non-natural persons can hold business offices, such as the GP role in a limited partnership
Mira and I both point out that there are several legal obligations that corporate officers must fulfill. For example, corporate officers are generally considered fiduciaries and have a duty of care, duty of loyalty, and duty of good faith. It seems likely that non-humans are not legally capable of fulfilling these obligations. (Again, it is not clear whether the CEO is required to be an officer.)
Mira points out that if it's a public company, SOX would apply and requires a designated CEO and CFO to submit documents to the SEC. So the role would be uniquely defined, and the SEC wouldn't accept a signature from a dog. However, this question isn't just about public companies - it should resolve YES if a private company can have a non-human CEO, even if a public company can't. So the SOX argument by itself isn't sufficient to resolve the question, but the other legal obligations mentioned above might still require human personhood.
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Summary:
The relevant portion of DGCL explicitly says that corporate officers (which would normally include the CEO) must be a “person.” But the DGCL section describing corporate directors says they must be “natural persons.”
A court would usually think that this use of different terms is intentional.
There are clear cases in which other non-natural persons can hold business offices, such as the GP role in a limited partnership
@Radicalia You should respond to the poll: https://manifold.markets/jack/can-a-delaware-corporation-legally#R5leKy9FLc5CnqBrnDWh
And to address the argument: I think this is a very good point, but it definitely doesn't rule out whether other parts of the law do require them an officer to be human. Specifically, as I posted in my summary, officers have a fiduciary duty, and it seems unlikely to me that a non-human can fulfill that (but I wasn't able to find an answer in my research)
@jack There are plenty of circumstances where an entity has fiduciary duties. For example, trust companies, partnerships, the trust relationship of the US federal government for Indian tribes.
I know this market is about current law, but iam curious how any future law could rationally be drafted to allow an AI officer or CEO. And within the context of that discussion ostensibly any untested question of law or interpretation would necessarily have the same discussion which may inform the judgment/interpretation in that case.
I think a big issue is responsibility, culpability, lability, and accountability. In the United States a corporation can be a managing member of a partnership (not certain about officer positionsin a corporation), and a corporation can sign documents, but it eventually winds its way down to an authorized person, natural person that is, who is authorized to sign on behalf of these entities.
The same set of natural persons often may comprise, control or direct many corporate entities which are used as intermediary entities to compartmentalize liability and claims from third parties, so that only the assets held in that corporation's name are available and the offices are indemnified by the corporation. But this if a corporate officer violates their duty to the corporation the corporation would have a claim against that officer. If AI were the officer it seems it would be judgement free, how can you hold an AI accountable? If the AI corporate officer was to be liable for the deaths of corporate employees, how could justice served? (Not that we see corporate officers going to jail all that often)
As per the resolution procedure, it's been a while with no new progress, so we now move to the resolution poll phase. The poll will be open for one week.
To respond to the poll, comment in a reply to this thread with whether you believe the answer YES or NO is more likely. You must respond honestly. Please include a brief rationale for your response.
Reminder to weigh in on this question! See my summary of the analysis so far here: https://manifold.markets/jack/can-a-delaware-corporation-legally#RAHfXSw3wzdpXRyU0Jd5
@jack No. It would be like real life choices adopting the "There's no rule saying a dog can't play basketball" logic.
If I had to guess, NO, because a judge would just say 'all precedent here involves human officers, nonhuman officers would create many problems for existing law'.
But it's probably better for someone to ask their business lawyer friend and resolve to that than polling a bunch of non lawyers
But it's probably better for someone to ask their business lawyer friend and resolve to that than polling a bunch of non lawyers
@jacksonpolack I agree, but people have had a long time to try to do that and no answers from business lawyer friends were forthcoming.
I have to say, the rationales here seem very weak compared to the detailed analysis that was posted before (see https://manifold.markets/jack/can-a-delaware-corporation-legally#RAHfXSw3wzdpXRyU0Jd5)
If you read that and decide on a different answer, you can change your response.
@jack I'm guessing yes - there is a well defined difference between a natural person and a person - if something says "person" in one spot and "natural person" in another, that means they only care if it is a person in the first given spot.
https://delcode.delaware.gov/title8/c001/sc04/index.html contains the definition for both Directors and Officers - for directors it says "natural person", for officer just "person". They certainly didn't forget there was a difference within the same document.
I agree my analysis is ... nonexistent more than it is weak, I just don't have relevant experience or knowledge to do better and figured that your reminder indicated you'd prefer that to nothing.
I could probably get a few answers by asking in eg reddit or discord communites but I already spend enough time researching stuff for manifold questions as is
Thanks all for the responses. We have 2 yes and 2 no, for a resolution of 50%. Any objections?
Well, I'll give summarization a stab, others feel free to add on:
Radicalia points out that Delaware law says that Delaware directors have to be “natural persons” but that officers have to be just “persons.” https://danashultz.com/2016/11/01/corporate-officers-need-not-human-beings/. "So, although I have never seen this, in these states a legal entity, represented by one of its authorized officers, could serve as an officer of a corporation." This suggests that CEO, who is typically an officer, does not need to be a human, at least to fulfill this part of the law. (Note: it is not clear whether the CEO is required to be an officer.)
Mira and I both point out that there are several legal obligations that corporate officers must fulfill. For example, corporate officers are generally considered fiduciaries and have a duty of care, duty of loyalty, and duty of good faith. It seems likely that non-humans are not legally capable of fulfilling these obligations. (Again, it is not clear whether the CEO is required to be an officer.)
Mira points out that if it's a public company, SOX would apply and requires a designated CEO and CFO to submit documents to the SEC. So the role would be uniquely defined, and the SEC wouldn't accept a signature from a dog. However, this question isn't just about public companies - it should resolve YES if a private company can have a non-human CEO, even if a public company can't. So the SOX argument by itself isn't sufficient to resolve the question, but the other legal obligations mentioned above might still require human personhood.
When does the market resolve?
It is closing in a few hours but the description "But if the law changes in 10 years to allow AIs to be CEO at that point in time, that doesn't count for this question." makes it seem like there might be information 10 years from now that the market resolution may need to discount from the resolution.
@ShitakiIntaki It resolves when there's no progress for a couple weeks (as mentioned in the resolution details above). I'll extend the close date now.
The statement about 10 years is saying that this question is not intended to predict the state of the world in 10 years, it's intended to predict the state of the world now.
@ShitakiIntaki My gut says NO, but I wouldn't be surprised if the laws, drafted on the assumption of a person, do not explicitly preclude a non-human, and may not address it until directly tested in court. If the law is ambiguous and the case law non-existent then the resolution seems to go to a poll. Will there be a discussion or forum before the poll is conducted, or can we assume that if it goes to a poll people will just be voting their convictions in a vacuum?
Does CEO in title alone count?
Does CEO not in title but via a fleshy proxy count? (this one sounds more like decision making tool use)
Does CEO not in title but functionally based upon the authority and duties assigned? (i.e. no one can over ride the autonomy of the "agent" except for the Board of Directors)
Liability and accountability probably should be large factors in whether or not an AI should be allowed/considered to be CEO. Can an AI can be held to account?
@ShitakiIntaki As stated in the market description, there is a discussion before the resolution poll.
I said in a previous comment that:
The intent of this question is to talk about a case where the company's official paperwork says that X has the CEO title. I'm not sure what exact implications that has, whether that has further legal requirements, as I mentioned in the comment below.
So CEO in title alone should count. CEO functionally but not in title does not count.
@jack Fair, but it’s unclear how the polled users are supposed to respond if the situation is uncertain! This is a deep jurisprudential issue.
@Radicalia Whichever they believe is more likely. E.g. we could imagine asking a question like, if a court rules on this question, what would the answer be? And the poll would be, would your prediction be above or below 50% for that question.
@jack That seems like a pretty reasonable poll question! But note that some philosophers of law might disagree that that is the right question to ask.