Berle and Means’ Control and Contemporary Problems




Control, Separation of ownership and control, Corporate governance, Acquisition and abuse of control, Intra-generational transfer of wealth and control, Holding companies, Company Law


The best way to judge the quality of a new company law is to test it against real-life problems. This article attempts to do that by placing the concept of control in the center of its observations, posing related questions, and offering food for thought for the drafters of company laws. The concept of control in the context of corporations with highly dispersed shareholders holding atomized stakes (‘quasi-public corporations’) was first dissected by Adolf A. Berle (lawyer) and Gardiner C. Means (economist) in their 1932 classic The Modern Corporation and Private Property. Their conceptualization and classification of control serves as the basis for the analysis herein, even though interest in control has lately been overshadowed by novel schools of thought based on agency theory and the like. With that in mind, the central thesis of this article is that control is the ultimate ‘invisible hand’ of company law because it is unparalleled in importance, omnipresent, and – due to its multifaceted nature – inherently difficult to grasp, especially insofar as its precise essence or its manifestation in real life circumstances is concerned. Secondly, using examples from recent cases from Central and Eastern Europe (‘CEE’), this article aims to show that the crucially important concept of control is still not fully understood.  Unfortunately, but perhaps unsurprisingly, empirical evidence readily proves that simple formulas for “taming” control do not exist. Instead, eternal vigilance, as well as regular re-evaluation of governance and oversight solutions, is needed not just by the boards and corporate officers in charge of oversight, but also by shareholders if control of corporate officers is at stake. Thirdly, the article demonstrates that control plays a similarly important role for small and mid-sized businesses (‘SMEs’) countering a burning set of problems that SMEs are doomed to face at some point in their existence: the issues corollary to the inter-generational transfer of the control and ownership of successfully operating companies. This topic is tackled through the prism of the milestone case of Galler v. Galler from Illinois, United States (US), which gave the green light to a peculiar but flexible set of solutions to these governance-related issues. I argue that the Galler formula, or at least parts of it, could be adapted elsewhere to serve similar ends. As the case studies offered in this article will demonstrate, these are living problems, especially insofar as they concern jurisdictions which are still yet to settle on wholly-adequate solutions, such as the post-socialist states of Central and Eastern Europe, China, and other fledgling legal systems across the globe.

Author Biography

Tibor Tajti, Central European University

Department of Legal Studies
Central European University - Private University
Quellenstrasse 51,
1100 Vienna, Austria


Aleksandrovski, I. (2007). Piercing the Corporate Veil and Liability in Company Debts in Macedonia. In: Messmann, S. and Tajti, T. (eds.), The Case Law of Central and Eastern Europe – Leasing, Percing the Corporate Veil and the Liability of Managers & Controlling Shareholders, Privatization, Takeovers and the Problems with Collateral Law (pp. 126-144). Boshum: European Univeristy Press. ISBN 9783899662627.

Berle, A. A. and Means, C. G. (2004). The Modern Corporation and Private Property. New Brunswick, London: Transaction Publishers, reprint. ISBN 0-88738-887-6.

Cross, B. F. and Prentice, A. R. (2007). Law and Corporate Finance. Cheltenham, Northampton: Edward Elgar Publishing Limited. ISBN 978-1-84720-107-2. DOI:

Ďurica, M. (2016). Commentary on Article 66a. In: Patakyová, M. et al, Obchodný Zákonník – Komentár (pp. 299-305). Bratislava: C.H. Beck. ISBN 9788089603466.

Fukuyama, F. (1995). Trust: The Social Virtues and the Creation of Prosperity. New York, London: Simon & Schuster. ISBN 0-02-910976-0.

Kay, John (1996). The Business of Economics. Oxford: Oxford University Press. ISBN 9780198292227. DOI:

Kisfaludi A. (2013). Commentary - Book Three on Company Law. In: Vékás L. and Gárdos P. (eds.), A Polgári Törvénykönyv Magyarázatokkal. Budapest: Complex. ISBN 9789632952789.

Roe, J. M. (1994). Strong Managers, Weak Owners: The Political Roots of American Corporate Finance. New Jersey: Princeton Univ. Press. ISBN 978-1-4008-2138-9. DOI:

Tajti, T. (2018). Shareholders’ Agreements in Hungary. In: Mock, S., Csach, K. and Havel, B. (eds.), International Handbook On Shareholders’ Agreements: Regulation, Practice And Comparative Analysis (pp. 335-387). Berlin, Boston: De Gruyter. DOI: DOI:

Blair-Smith, R. and Helfenstein, L. (1946). A Death Sentence or a New Lease on Life? - A Survey of Corporate Adjustments under the Public Utility Holding Company Act. University of Pennsylvania Law Review, 94(2), 148-201. DOI: DOI:

Cankar, N. (2005). Transition Economies and Corporate Governance Codes: Can Self-Regulation of Corporate Governance Really Work?. Journal of Corporate Law Studies, 5(2), 285-304. DOI: DOI:

Krygier, M. (2001). Transitional Questions about the Rule of Law: Why, What, and How?. East Central Europe, 28(1), 1-34. DOI:

Patakyová, M. and Grambličková, B. (2020). Mandatory and Default Regulation in Slovak Commercial Law. Bratislava Law Review, 4(1), 93-112. DOI: DOI:

Patakyová, M., Grambličková, B. and Duračinská, J. (2022). The Legal Basis and Contextual Interpretation of the Duty of Care in Company Law in the Slovak Republic: from a “Gentlemanly Amateur” to a Professional Director?. Acta Universitatis Carolinae Iuridica, 68(3), 87-103. DOI: DOI:

Tajti, T. (2005). Corporate Governance: An Oversold Elitist Idea of No lnterest To or For the Central European Transitory Economies?. The Corporate Governance Law Review, 1(1), 2-91. DOI:

Tajti T. (2019). Unprotected Consumers in the Digital Age: The Consumer-creditors of Bankrupt, Abandoned, Defunct and of Zombie Companies. Tilburg Law Review, 24(1), 3-26. DOI: DOI:

Tajti, T. and Whitman, R. (2016). Common Law Trusts in Hungary and other Continental European Civil Law Systems. Johan Marshall Law Review, 49(3), 709-726.

Bradarić, B. (2022). Afera INA, ‘teška’ stotine miliona eura, trese Hrvatsku [The Affairs INA, ‘Weighing’ Hundreds of Millions of Euros, Is Shaking Croatia]. Al Jazeera. Available at (accessed on 10.12.2022).

Enron a Year on: Investor Self-Protection (2002). The Economist. Available at: (accessed on 10.12.2022).

HVG (2022). A MOL a sajtóval egy időben tudta meg, hogy őrizetbe vették cége, az INA vezetőit, [MOL has learned about the arrest of INA directors contemporaneously with the media]. Available at: (accessed 17 Dec. 2022).

Kuchler, H. (2018). Zuckerberg’s Dual Role at Facebook Helm Draws More Fire. Financial Times. Available at: (accessed on 10.12.2022).

Masters, B. (2019). Lyft’s IPO shows some shareholders are more equal than others. Financial Times. Available at: (accessed on 10.12.2022).

Redakcijski tekst (2022). Uskok otkrio detalje: HDZ-ov direktor iz INA-e izvukao više od milijardu kuna! [USKOK Revealed the Details: the Director of [the Ruling Political Party] HDZ Pulled out more than a Billion Kunas from INA]. Available at: (accessed on 10.12.2022).

V. B. (2022). Ina se oglasila o aferi teškoj milijardu kuna: Škugor je potpisnik svih spornih ugovora. MOL o skandalu doznao iz medija. Tportal. Available at: (accessed on 10.12.2022).

Model Business Corporations Act (US) - American Bar Association. Committee on Corporate Laws. Model Business Corporation Act: Official Text with Official Comment and Statutory Cross-References

Graphisoft. Available at: (accessed on 10.12.2022).

INA. Available at: (accessed on 10.12.2022).

USKOK. Available at: (accessed on 10.12.2022).




How to Cite

Tajti, T. (2022). Berle and Means’ Control and Contemporary Problems. Bratislava Law Review, 6(2), 59–76.