From Corporate Governance to Algorithm Governance
Jan Lieder · Cambridge University Press eBooks · 2022
This chapter explores the changes that AI brings about in corporate law and corporate governance, especially in terms of the challenges it poses for corporations. The law scholar Jan Lieder argues that whilst there is the potential to enhance the current system, there are also risks of destabilisation. Although algorithms are already being used in the board room, lawmakers should not consider legally recognizing e-persons as directors and managers. Rather, academia should evaluate the effects of AI on the corporate duties of boards and their liabilities. By critically examining three main topics, algorithms as directors, AI in a management board, and AI in a supervisory board, the author suggests the need for transparency in a company’s practices regarding AI for awareness-raising and the enhancement of overall algorithm governance, as well as the need for boards to report on their overall AI strategy and ethical guidelines relating to the responsibilities, competencies, and protective measures they established. Additionally, the author argues that a reporting obligation should require the boards to deal with questions of individual rights and explain how they relate to them.