Corporation
A corporation is a legal entity that is separate from its owners, known as shareholders. It is formed to conduct business and has the ability to enter into contracts, own assets, and incur liabilities. Corporations provide limited liability protection to their owners, meaning that the shareholders are generally not personally responsible for the company's debts and obligations.
7 Key excerpts on "Corporation"
eBook - ePubInside the Boardroom
How Boards Really Work and the Coming Revolution in Corporate Governance
- Richard Leblanc, James Gillies(Authors)
- 2010(Publication Date)
- Wiley(Publisher)
...In most countries these acts are relatively permissive in the sense that they make it very easy for a Corporation to be chartered. 32 Usually, all that is required of people seeking to form a company is that they be of legal age, not bankrupt and of sound mind. In short, individuals are given the right to create an organization that to all intents and purposes is a form of private government—a legal entity, separate from its members, with a permanent existence. A modern Corporation has the following characteristics: • the right to acquire other Corporations and engage in activities of its own choice; • a separation of ownership and management and division of authority between management and a board of directors, governors or overseers; • limited liability for those who invest in it. Through the years, literally tens of thousands of laws and regulations have been enacted that impact upon the Corporation, but the fundamental concept of the institution over the centuries has not changed. 33 A VAST ARRAY OF SIMILARITIES AND DIFFERENCES Because economies have become so complex and the law is so permissive with respect to the organization of Corporations, it is not astonishing that almost every type of Corporation that can be imagined has, at some time or in some place, been created. They can range in size from one-person companies selling one product or providing one service in a small town, to gigantic organizations with sales larger than the gross national product of some countries, selling a multitude of different products throughout the world, e.g., General Motors and Walmart, and there is every type in between...
eBook - ePub- Richard D. Harroch(Author)
- 2010(Publication Date)
- For Dummies(Publisher)
...I tell you how to correctly form a Corporation in Chapter 3. Corporations make a lot of sense for new businesses — especially if you plan to grow the business and attract investors. Also, you can sell a Corporation more easily than almost any other entity. And, if you have hopes of taking the company public, you almost surely have to make the business a Corporation. The following key points characterize C Corporations: Limited liability: Generally, the shareholders, officers, and directors of the Corporation aren’t personally liable for the Corporation’s debts and liabilities. Of course, if a shareholder signs a guaranty for a corporate debt, personal liability can be a factor. Perpetual existence: In contrast to partnerships and sole proprietor-ships, Corporations generally can last forever. However, a Corporation may be dissolved by voluntary action. Control and management: A Corporation’s overall management is vested in the board of directors, a group of men and women whom the shareholders choose. The board of directors, in turn, elects the Corporation’s officers, who handle the business’s day-to-day affairs under the board’s general direction. Shareholders’ rights: Shareholders typically have various rights, including the right to elect directors, receive information, inspect corporate records, vote on fundamental business decisions (such as mergers and liquidations), and share in distributions. Owners and profits: The owners of the Corporation are the shareholders who have received stock in the Corporation. Such stock is typically common stock, but it can sometimes be preferred stock (which grants the holders certain senior rights over the holders of common stock). When the company pays dividends, the common stock holders are entitled to a pro rata share of all dividends made to the common shareholders. The dividend rights for preferred shareholders depend on negotiations made in connection with the purchase of the preferred stock...
eBook - ePub- Susan McLaughlin(Author)
- 2018(Publication Date)
- Routledge(Publisher)
...The individual’s acts in the capacity of the Corporation are separate from the individual’s personal acts. In the study of business organisations, we are not concerned with Corporations sole; we are concerned with Corporations aggregate. Corporations aggregate may (but need not) have more than one member at any given time. Statutory Corporations, chartered Corporations, registered companies, building societies, industrial and provident societies (co-operatives and community benefit societies), credit unions and limited liability partnerships are all examples of Corporations aggregate. Figure 3.1 illustrates the classification of legal persons. Figure 3.1 Types of legal persons. 3.3 The consequences of inCorporation/separate legal personality inCorporation The process by which a legal entity, separate from its owners and managers, is formed In general terms, a company, because it is a Corporation, is a person in law separate from any and all of the individuals involved in the company whether those individuals are its owners/shareholders, its managers/directors or are involved in some other way. In general terms a company has the capacity to both: ■ enjoy (by virtue of its existence), or acquire, enforceable legal rights or property; and ■ be (by virtue of its existence), or become subject to, enforceable legal obligations and liabilities. In specific terms, like a natural person, a company: ■ can own property; ■ can be a party to a contract; ■ can act tortiously; ■ can be a victim of tortious behaviour; ■ can be a trustee; ■ can be a beneficiary of a trust; ■ can commit a. crime; ■ can be the victim of a crime; ■ can sue and be sued; ■ has a nationality; ■ has a domicile; ■ has human rights; ■ has human rights responsibilities...
eBook - ePub- Christopher May(Author)
- 2015(Publication Date)
- Routledge(Publisher)
...Nevertheless, in all cases it is the Corporation as single political and legal person who is regarded as the political actor concerned. The Corporation is, however, not merely perceived as a single political actor from the outside; the rights of legal personhood also allow the Corporation to clearly control its various assets (human, infrastructural, and intangible) and deploy them to a set of defined ends (most usually set by the management of the Corporation), by establishing a single and definable locus of authority. This localized (within the Corporation itself) political power is constituted by the state through the legal arrangements put in place via the law for inCorporation, and the associated legal structures of company law, employment law, and other salient regulatory apparatus. Of these, perhaps the most important is the law of limited liability for the shareholders of the Corporation. Limited liability and the absent owner As noted earlier, the shareholders of Corporations are able to limit their liability to claims that stem from the activities of the Corporation itself, or the consequences of those actions, ranging from debt to damages. This arrangement is hardly a direct analogue to the plight of the natural person, who is usually held responsible for the consequences of their actions, although equally there is no division between the natural person and their (self) ownership that compares with shareholding. At its most basic the justification for limited liability is that it allows accelerated economic development and activity as those undertaking investment in such work are able to limit their exposure to risk to the original amount they felt able to stake or invest; there are no further calls on their assets other than those which they have voluntarily undertaken. However, it is sometimes forgotten that the legal personality of the Corporation also extends this protection in the other direction as well...
eBook - ePub- Keith Owens(Author)
- 2013(Publication Date)
- Routledge-Cavendish(Publisher)
...CHAPTER 29 CorporationS This chapter deals with the concept of corporate personality; the distinction between companies and partnerships; the formalities for forming a company, which includes an account of the contractual capacity of the company; and the distinction between public and private companies. A limited liability company’ is one of three main types of business entity. It is useful to consider all three before going on to look at the particular characteristics of a limited company. They are as follows. (a) Sole trader There is relatively little regulation of a sole trader, and there is no general requirement of registration. A sole trader has unlimited liability for any debts that his business incurs. When he becomes insolvent, he may be made bankrupt, which means, among other things, that he cannot be a company director. If he trades in any name other than his own, he must comply with the Business Names Act 1985. If his turnover exceeds the current VAT threshold, he must register for VAT. He must keep sufficient accounts to enable the Inland Revenue to determine his profits, but there is no requirement that his accounts should be audited or even, indeed, prepared by a professional accountant. (b) Partnership The legal definition of a partnership is a relationship of ‘two or more persons carrying on business in common with a view to profit’, partnerships are known as ‘firms’. They are not companies, even though many professional firms have the word ‘company’ in their title. (Commonly, the title consists of the name of the principal partner or partners followed by ‘& Co’.) The relationship is governed by the Partnership Act 1890. This generally provides for rules which operate in the absence of contrary agreement between the partners. The legal controls over a partnership are not extensive—there is no need for registration. There is no need for the parties to have a partnership agreement but this is advisable...
eBook - ePubCorporation 2020
Transforming Business for Tomorrow's World
- Pavan Sukhdev(Author)
- 2012(Publication Date)
- Island Press(Publisher)
...CHAPTER ONE The Legal History of the Corporation If you would understand anything, observe its beginning and its development. — Aristotle To tell the story of the Corporation is to tell the story of a grand bargain gone awry. Through history, governments have granted Corporations special privileges such as corporate personhood and limited liability, with the expectation that Corporations would serve the interests of the state and the broader public. And yet legislative history and the ascendancy of free-market capitalism have ensured that most modern Corporations seek only to advance their own self-interest. Billions of dollars are spent every year on corporate and trade association lobbying to tilt the field of commercial opportunity toward maximizing private financial capital. Responsibilities of maintaining public capital are ignored, in particular those of natural capital and social capital, even though these are respectively the ecological bedrock and institutional masonry of any successful human economy. Dire results follow for both the public good and trust in the corporate institution. Civilizations have repeatedly recognized the value of Corporations. Henry Ford never visited the great Swedish Stora Kopparberg mine (chartered in 1347, the oldest Corporation in continuous operation), but he would have recognized its genius. Ancient Rome’s societates publicanorum and the Mauryan Empire’s sreni in India arrived at astonishingly similar approaches to pooling capital and reducing risk. History suggests that the Corporation is one of mankind’s most useful inventions, as essential for continuity and achievement in commerce as the advent of the written word was for ideas. At the same time, Corporations have always come with risks, and they are centrally implicated in many of today’s most serious problems...
eBook - ePub- Tom Craig, David Campbell(Authors)
- 2012(Publication Date)
- Routledge(Publisher)
...Limited Companies DOI: 10.4324/9780080454603-4 Learning Objectives After studying this chapter, students should be able to describe: the different types of inCorporation; the nature of shares and shareholding; the differences between public and private limited companies; the legal requirements for limited companies; the meaning of limited liability; the advantages and disadvantages of limited company status; the nature of holding companies; the roles of a company’s senior officers. 4.1 Introduction An Organisation as a Legal Entity In the case of a sole proprietor, we saw in Chapter 3 that the law recognises the human person carrying out business with a view to profit. Similarly, for partnerships, the law recognises the partners as individuals, albeit working together under a legal agreement. The type of organisations we shall consider in this chapter is quite different from those we considered in the previous chapter. 4.2 Corporations English law recognises three ways in which new Corporations can originate either by charter, statute or by registration – and a Corporation exists until it is formally dissolved. Corporations have similar rights and privileges as humans and, while companies may be Corporations, it should be noted that there are different types of Corporation. Corporation by Charter The crown can create any Corporation it chooses, and this route of inCorporation is usually used by public bodies, such as a university. As the royal charter does not state the precise details of the legal powers of this type of Corporation, any contracts it makes cannot be declared void on the grounds of ‘ ultra vires ’ (i.e. acting beyond one’s powers)...
