Corporations
Corporations are legal entities that are separate from their owners, providing limited liability and allowing for perpetual existence. They can enter into contracts, own property, and sue or be sued. Corporations are formed by filing articles of incorporation with the state and are governed by a board of directors, officers, and shareholders.
8 Key excerpts on "Corporations"
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- Christopher May(Author)
- 2015(Publication Date)
- Routledge(Publisher)
...The core set of rights that are generally recognized in most developed country jurisdictions, and elsewhere, are: the right to a name (and thus to have an identity); the right to sue and be sued; the right to acquire, hold and dispose of property; the right to contract; and specified rights under various constitutional and legislative provisions. [and specifically as regards Corporations] continued existence, notwithstanding a change in membership or share ownership; limited liability of members for organizational legal responsibility; and central direction of management. 5 While there are also some possible responsibilities attached to a corporation’s activity, these are generally somewhat circumscribed by the impact of limited liability, and the frequent difficulty of establishing the location of decisions that might have led to offences that could require sanction under law. 6 For instance, in the United Kingdom the difficulty of establishing a single “directing mind” has undermined past attempts to prosecute corporate manslaughter, despite its statutory introduction as a crime. The legal personality of the corporation might also be seen as an aspect of the structural power of business. By some accounts it excessively empowers business and constrains policy options in a way that can be detrimental to democracy; these “persons” can wield influence in a manner seldom possible for natural persons by virtue of the resources they control and direct. 7 However, discussions of democracy often take the corporate form as so self-evidently a standard functional feature of society that it is not worthy of comment, or even necessarily noticed; as such this normalizing or naturalizing of a social fact might be one indication of the influence of forms of agenda-setting or corporate structural power...
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- Routledge-Cavendish(Author)
- 2009(Publication Date)
- Routledge-Cavendish(Publisher)
...10 Company law Corporations and their legal characteristics Types of Corporations Companies differ from partnerships in that they are bodies corporate. Corporations can be created in one of three ways. By grant of royal charter These are governed mainly by the common law. They tend to be restricted to professional, educational and charitable institutions and are not used in relation to business enterprises. By special Act of Parliament Known as statutory Corporations. Although common during the 19th century, particularly in relation to railway and public utility companies, they are not greatly used nowadays, and certainly not by ordinary trading companies. By registration under the Companies Acts Since 1844, companies have acquired the status of a corporation simply by complying with the requirements for registration set out in general Acts of Parliament. This is the method by which the great majority of trading enterprises are incorporated. The doctrine of separate personality Separate personality : the company exists as a legal person in its own right, completely distinct from the members who own shares in it (Salomon v Salomon and Co (1887)). Consequences of separate personality Limited liability This refers to the fact that the potential liability of shareholders is fixed at a maximum level equal to the nominal value of the shares held. Perpetual succession This refers to the fact the company continues to exist irrespective of any change in its membership...
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)...
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- Chris Monaghan(Author)
- 2015(Publication Date)
- Routledge(Publisher)
...This is very important for a number of reasons. First, there will be a distinction between the company and the shareholders who own it. This means that if a private company limited by shares becomes insolvent, the maximum extent of a shareholder’s personal liability will be their paid up or unpaid shareholding. The shareholder receives protection from unlimited personal liability. This is an advantage over unincorporated businesses where there is no legal distinction between the business owner and the business. Consequentially, the business owner has unlimited personal liability. The company is capable of owning property, employing staff, commencing legal action and of being sued. The company can also face criminal prosecution for offences such as corporate manslaughter (see the Corporate Manslaughter and Corporate Homicide Act 2007). Additionally, the company may own shares in another company or enter into a partnership. As the company has a separate legal personality there is a risk that persons or businesses owed money by the company will receive nothing in the event that it becomes insolvent, notwithstanding the fact that its shareholders may be multi-millionaires. The most important decision regarding separate legal personality is Salomon v Salomon & Co Ltd [1897] AC 22. KEY CASE ANALYSIS: Salomon v Salomon & Co Ltd [1897] AC 22 Background Mr Salomon owned a business and decided to sell it to a private limited company that he had created in accordance with the Companies Act 1862. The company had seven shareholders, which included Mr Salomon who had 20,000 shares and his wife and children who had one share each. As part of the purchase price of the company Mr Salomon received a debenture, which was a floating charge over the company. This debenture would make Mr Salomon a priority creditor if the company became insolvent...
