Legal Definitions - internal-affairs doctrine

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.