If a drug maker like GlaxoSmithKline, gave free AIDS drugs to a poor country, would that be illegal in the US?
The reasoning being that companies are required by law to do maximize profits for their shareholders. Or is that just a myth?
Answers:
It would not be a criminal act. The shareholders could probably bring a shareholder derivitave suit (a suit a shareholder brings on behalf of the corporation) and claim that the corporation is wasting assets or that the board breached it's fiduciary duty of care by making such a decision. However, whether a suit would be successful is another issue. The business decisions made by boards are entitled to deference in court under the so called "business judgement rule" which essentially prevents plaintiff's from second-guessing decisions in hindsight. Here, there is a justifiable business reason for doing such a thing: creation of good will, free p.r., creation of future loyal customers of the product.
They make it, they can do whatever they want with it. But it would probably make their shareholders angry.
And companies aren't required by law to maximize profits, that's just the philosophical underpinning to capitalism. In fact, Santa Clara County v. Southern Pacific Railroad, and the cases which followed from it, made the corporations "protected entities" for many reasons, one major one being so that shareholders could not sue the company for a loss of profit.
They can do anything they wish as long as they pay the ......first.
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