When Workers Pierce the Corporate Veil: Brazil’s Forgotten Innovation
In the early 20th century, foreign companies operating in Brazil would extract profits while using thinly capitalized subsidiaries to directly employ their workers. When things went wrong, workers were left with worthless claims while capital remained safely sheltered in the foreign-located parent companies. To address this issue, in 1937 Brazil adopted a novel legal innovation: imposing joint and several liability on parent companies for labor obligations. Recovering this history reveals that legal innovation often flows from the Global South, that limited liability is neither natural nor universal, and that seemingly technical corporate law doctrines are deeply entangled with questions of distribution, power, and sovereignty.
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