June 05, 2014
Algorithm as Director
Posted by Gordon Smith

This looks like an April Fool's story, but the date is off:

A Hong Kong VC fund has just appointed an algorithm to its board.

Deep Knowledge Ventures, a firm that focuses on age-related disease drugs and regenerative medicine projects, says the program, called VITAL, can make investment recommendations about life sciences firms by poring over large amounts of data.

Just like other members of the board, the algorithm gets to vote on whether the firm makes an investment in a specific company or not. The program will be the sixth member of DKV's board.

I know what you are thinking ... could we see algorithms as board members in the US?

The Delaware General Corporation Law anticipates the question of non-human board members. Section 141(b) of the DGCL provides: "The board of directors of a corporation shall consist of 1 or more members, each of whom shall be a natural person."

The Model Business Corporation Act, on the other hand, provides: "A board of directors must consist of one or more individuals ..." As far as I know, "individual" is not a defined term in the MBCA or by any court interpreting this provision, but I assume it would be interpreted to mean "human being." That could be a nice question for a corpus linguist, if it came to that. Note that the statute does not provide every director must be an individual.

Corporate Law, Corpus Linguistics | Bookmark

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