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Simple English definitions for legal terms
internal-affairs doctrine
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A quick definition of internal-affairs doctrine:
The internal-affairs doctrine is a rule that says when there is a disagreement between a company and its shareholders, directors, officers, or agents, the law of the state where the company was incorporated will be used to solve the problem. This rule applies in most states, but some states like California and New York have their own requirements for foreign companies. Basically, this rule helps to determine the rights and responsibilities of a company's managers and shareholders, and it is called the internal affairs doctrine.
A more thorough explanation:
The internal-affairs doctrine is a rule that applies in disputes involving a corporation and its relationships with its shareholders, directors, officers, or agents. It states that the law to be applied is the law of the state of incorporation.
For example, if a corporation is incorporated in Delaware and a dispute arises between the corporation and its shareholders, the court will apply Delaware law to resolve the dispute. This doctrine applies in the majority of states, but in some states like California and New York, foreign corporations must meet state-law requirements in specified circumstances.
The internal-affairs doctrine is important because it helps to ensure consistency in the application of corporate law. It allows corporations to know which laws will govern their internal affairs, regardless of where they do business.