Posted by Curtis J. Milhaupt (Stanford Law School), Mariana Pargendler (Harvard Law School), and Dan W. Puchniak (Yong Pung How School of Law), on Thursday, May 28, 2026
What truly defines a corporation’s national identity in the 21st century? Is it the jurisdiction of its incorporation, the location of its administrative headquarters, or the origin of its ultimate control through equity ownership? These traditional markers, once seemingly definitive, are increasingly being challenged and reinterpreted in the complex tapestry of the contemporary global economy. A groundbreaking paper by leading legal scholars Curtis J. Milhaupt, Mariana Pargendler, and Dan W. Puchniak delves into this evolving landscape, arguing that a corporation’s national identity is no longer a static legal attribute but a dynamic, contested construct emerging from the intricate interplay of legal, economic, geopolitical, and symbolic facets.
This in-depth analysis, based on their recent paper published on SSRN, posits that corporate national identity (CNI) is a multifaceted concept whose relative importance shifts across different contexts and over time. The traditional legal tests, while still relevant, no longer fully encapsulate how nations, regulatory bodies, investors, and the public perceive and categorize corporations in an era marked by heightened geopolitical rivalries and profound digital interdependence. New factors, such as the geographical footprint of supply chains, the locus of data storage and access, the extent of state leverage over private entities, and a corporation’s deliberate efforts to shape public perception of its origins, are now playing a pivotal role.
One striking phenomenon highlighted in the research is the emergence of "Singapore washing," a strategic maneuver particularly employed by founders with Chinese origins to distance their companies from overt affiliations with China. This practice underscores the growing awareness that perceived nationality can significantly impact market access, regulatory scrutiny, and public reception.
The scholars identify two particularly significant emerging developments in this domain: the "data seat" doctrine and an expanded "government influence" test. The "data seat" doctrine posits that the location and accessibility of a corporation’s data are becoming crucial indicators of its national identity. This reflects a growing global concern over data sovereignty and the potential for foreign governments to access sensitive information. Concurrently, the "government influence" test moves beyond formal voting control to scrutinize the actual degree of leverage states can exert over firms. This leverage can manifest through various channels, including legal obligations, the presence of party committees within corporate structures, regulatory authority, or specific governance rights embedded in corporate charters.
The paper meticulously illustrates these evolving dynamics through four compelling case studies: TikTok, Shein, Pirelli, and the acquisition of U.S. Steel by Nippon Steel. These examples offer a granular view of how legal, economic, and political forces coalesce to determine, and often contest, a corporation’s national allegiance.
TikTok: Data, Geopolitics, and the Shifting Sands of Control
The controversy surrounding TikTok serves as a potent illustration of how contemporary disputes over corporate nationality are increasingly centered on data access and geopolitical influence, rather than solely on formal corporate structures. ByteDance, TikTok’s parent company, is incorporated in the Cayman Islands. Its U.S. operations are conducted through American entities, and a substantial majority of its equity is held by global institutional investors. Despite these structural elements, the company’s founder, a Chinese citizen, retains voting control.
However, the U.S. Congress, in a 2024 statute, declared TikTok to be "controlled by a foreign adversary," specifically referencing the Chinese government. The rationale behind this designation stemmed from concerns that Chinese authorities could leverage access to user data or influence the platform’s content recommendation algorithm to undermine U.S. national interests. The constitutionality of this statute was subsequently upheld by the U.S. Supreme Court, validating the government’s apprehension. The eventual mandated restructuring of TikTok’s U.S. operations into a new joint venture, featuring majority American ownership and voting control, signals a potential departure from a binary approach of outright approval or blockage of foreign investments. Instead, it suggests a move towards more intrusive forms of midstream governance reconfiguration aimed at mitigating perceived national security risks.
This case highlights a critical juncture where national security imperatives directly intersect with corporate structure and operational control, forcing a re-evaluation of what constitutes "foreign control" in the digital age. The sheer volume of data processed by platforms like TikTok, coupled with their potential to shape public discourse, has elevated them to the forefront of geopolitical concerns.
Shein: Economic Geography Trumps Legal and Symbolic Maneuvers
The case of Shein, the fast-fashion giant, offers a contrasting perspective, demonstrating the limitations of legal and symbolic strategies in re-crafting corporate identity when economic realities remain deeply entrenched. Shein’s ambitious attempts to launch Initial Public Offerings (IPOs) on the New York Stock Exchange and the London Stock Exchange were thwarted amidst allegations of forced labor within its extensive supply chains.
In response to these pressures, Shein’s founder acquired Singaporean citizenship, reincorporated the company offshore, relocated key management functions to Singapore, and localized data storage within the city-state. These actions were ostensibly designed to present Shein as a globally diversified entity with strong ties to a neutral jurisdiction. However, despite these significant legal and symbolic repositioning efforts, Shein continued to be perceived as "Chinese" due to the deep integration of its production network and supply chain within mainland China. In this instance, the company’s economic geography – its reliance on Chinese manufacturing and labor – proved to be a more potent determinant of its perceived nationality than its legal restructuring or symbolic reinvention.
This scenario underscores the enduring significance of operational realities. For regulators and consumers alike, the physical and economic underpinnings of a business, particularly concerning production and labor practices, can outweigh attempts to alter its perceived origin through legal or symbolic means. The allegations of forced labor, if substantiated, would likely continue to cast a shadow over Shein’s global aspirations, irrespective of its corporate domicile.
Pirelli and U.S. Steel: Government Influence Through Governance Rights
The experiences of Pirelli and the acquisition of U.S. Steel by Nippon Steel underscore a third critical trend: the increasingly direct role governments are playing in reshaping corporate nationality, not through ownership stakes, but through the assertion of governance rights.
In Italy, authorities invoked "golden power" provisions – special state intervention powers designed to protect national strategic assets – to curtail the governance rights of a Chinese state-owned shareholder in Pirelli. This intervention effectively restored the company’s Italian identity and its control by an Italian shareholder, even without altering the underlying ownership structure. This demonstrated a proactive approach by the Italian government to safeguard a national champion in a strategically important sector, highlighting the utilization of regulatory tools to manage foreign influence.
Similarly, in the United States, the acquisition of U.S. Steel by Nippon Steel faced significant scrutiny. The deal’s progression was contingent upon the U.S. government securing extraordinary governance rights, notably a "golden share" arrangement. This provision granted then-President Trump veto authority over major corporate decisions, ostensibly on national security grounds. Following the acquisition by its new Japanese parent, the CEO of U.S. Steel declared the company to be "absolutely" still American and asserted a fiduciary duty not only to shareholders but also to U.S. national security. This situation exemplifies how national security concerns can translate into direct governmental influence over corporate decision-making, even in the context of foreign investment.
These cases reveal a paradigm shift where the state actively intervenes to influence the direction and perceived loyalty of corporations, leveraging legal frameworks to assert control over governance rather than direct ownership. This approach allows governments to maintain a degree of oversight and influence over key industries and companies without necessarily engaging in nationalization or imposing outright ownership restrictions.
Broader Implications: Navigating a New Era of Corporate Governance
The fluidity and contestability of corporate national identity (CNI) present profound implications and novel uncertainties for corporate governance, investor protection, and the landscape of cross-border investment. As governments increasingly intervene in corporate governance arrangements, often citing geopolitical and national security imperatives, corporate boards and investors are confronted with complex questions that traditional corporate law doctrines are ill-equipped to address.
For instance, how will corporate law adapt to the conceptual expansion of "corporate control"? This expansion now encompasses not only equity ownership or indirect influence on board decision-making but also operational factors like the location and accessibility of data, and political factors such as the presence of Chinese Communist Party (CCP) committees within the operations of Chinese-linked firms. As companies increasingly become strategic partners with their home governments, this raises critical questions about the fundamental purpose of a corporation and the potential expansion of fiduciary duties.
Furthermore, what remedies, if any, are available to shareholders or acquirers when state intervention in a company’s corporate governance—driven by national security or industrial policy objectives—leads to a reduction in firm value or impairs the rights of specific shareholders? Early indications suggest that private ordering mechanisms might emerge as a means to address some of these uncertainties. Concurrently, corporate boards of directors are likely to increasingly engage in "CNI engineering" as a proactive form of geopolitical risk management. This involves strategically shaping the perceived national identity of their companies to navigate the complex international regulatory and political environment.
The article situates these developments within the broader transformation of the global economy. In this evolving landscape, states are increasingly leveraging the vulnerabilities inherent in interconnected economic networks for strategic advantage. Consequently, corporate governance itself has become a significant arena for geopolitical contestation, with national interests and corporate strategies becoming inextricably intertwined. The ongoing evolution of these dynamics suggests that the legal and practical definitions of corporate nationality will continue to be debated and redefined for the foreseeable future, impacting global commerce and international relations in profound ways.
