A Corporation Is a Legal Entity Recognized as an Artificial Person

In the United States, the formation of a society usually required legislation in the late 19th century. Many private companies, such as Carnegie`s steel company and Rockefeller`s Standard Oil, have avoided the business model for this reason (as a trust). State governments began passing more permissive corporate laws beginning in the early 19th century, though they were all restrictive, often in an effort to prevent corporations from gaining too much wealth and power. [28] There is some overlap between shares/non-shares and for-profit/not-for-profit corporations, as not-for-profit corporations are still not stock-oriented. A for-profit corporation is almost always a public corporation, but some for-profit corporations may choose not to be corporations. To simplify the statement, whenever “shareholder” or “shareholder” is used in the remainder of this section to refer to a public corporation, it is assumed to mean the same as “member” for a not-for-profit corporation or for an unlisted not-for-profit corporation. Registered companies have a legal personality recognised by local authorities and their shares are held by shareholders[5][6], whose liability is generally limited to their investment. However, there was still no limited liability and the members of the company could continue to be held liable for the unlimited losses of the company. [24] The next decisive development was the Limited Liability Act of 1855, which was passed at the request of the then Vice-President of the Chamber of Commerce, Robert Lowe. This allowed investors to limit their liability in the event of the company`s default to the amount they had invested in the company – shareholders were still directly liable to creditors, but only for the unpaid portion of their shares. (The principle that shareholders are liable to the company was introduced in the Joint Stock Companies Act of 1844.) The person who creates a trust transfers real or personal ownership to a trust that is held for the benefit of the beneficiary who will ultimately benefit from the trust.

A third party, the trustee, holds legal ownership of the property and is responsible for carrying out the trustee`s instructions. Jurists such as Joel Bakan have observed that an economic company founded as a “legal entity” has a psychopathic personality because it must elevate its own interests above those of others, even if this entails great risks and serious harm to the public or other third parties. A corporation is incorporated when it is formed by a group of shareholders who own the corporation, represented by their ownership of common shares, in order to pursue a common purpose. The goals of a business may or may not be for-profit, as with charities. However, the vast majority of companies strive to provide a return to their shareholders. Shareholders, as owners of a percentage of the Company, are only responsible for the payment of their shares to the Company`s treasury at the time of issuance. A trust is a legal agreement in which property is held by one or more persons for the benefit of a third party. Companies have an unlimited lifespan, which means that the sale of shares or the death of a shareholder or employee does not affect the continued life of the company. In most countries, company names contain a term or abbreviation that refers to the company`s corporate status (for example, “Incorporated” or “Inc.” in the United States) or the limited liability of its members (for example, “Limited” or “Ltd.”). [33] These terms and conditions vary depending on the place of jurisdiction and language. In some jurisdictions, they are mandatory, and in others, such as California, they are not. [34] Their use allows everyone to know constructively that it is a company whose liability is limited: one can only confiscate the assets that the company still controls if one receives a judgment against it.

Companies usually have a unique name. Historically, some companies have been named after the members of their boards of directors: for example, the “President and Fellows of Harvard College” is the name of one of the two boards of trustees of Harvard University, but it is also the exact name under which Harvard was legally established. [32] Today, in most jurisdictions, companies may have a unique name that does not have to refer to the members of their board of directors. In Canada, this possibility is taken to the extreme: many small Canadian businesses have no name at all, but only numbers based on a registration number (p. e.g., “12345678 Ontario Limited”) awarded by the provincial or territorial government in which the business is located. Shareholders, who typically receive one vote per share, elect an annual Board of Directors to appoint and oversee the management of the Company`s day-to-day operations. The board of directors executes the company`s business plan and must use all means to do so. Although members of the Board of Directors are generally not responsible for the Company`s debts, they have a duty of care to the Company and may assume personal responsibilities if they neglect this obligation. Some tax laws also provide for the personal obligations of the board of directors. A corporation is, at least theoretically, owned and controlled by its members. In a public limited company, members are called shareholders, and each of their shares in the ownership, control and profit of the company is determined by the share of the shares of the company that they own. Thus, a person who holds a quarter of the shares of a public limited company owns a quarter of the company, is entitled to a quarter of the profit (or at least a quarter of the profit given to shareholders in the form of a dividend) and has a quarter of the votes that can be cast at general meetings.

In general, a corporation submits to the Government a law setting out the general nature of the corporation, the amount of shares it is entitled to issue and the names and addresses of the directors. Once the bylaws are approved, the corporation`s directors meet to create bylaws that govern the company`s internal functions, such as meeting procedures and management positions. Almost all well-known companies are companies, including Microsoft Corporation, Coca-Cola Company, and Toyota Motor Corporation. Some companies do business under their names and also under trade names, such as Alphabet Inc., which is known to operate as Google. Entities that did business and were subject to legal rights were found in ancient Rome and the Maurya Empire in ancient India. [13] In medieval Europe, churches were incorporated, as were local governments, such as the City of London Corporation. The fact was that incorporation would survive longer than the lifespan of a particular member and would exist forever. Believed to be the oldest trading company in the world, the Stora Kopparberg mining community in Falun, Sweden, received a charter from King Magnus Eriksson in 1347. The word “body” is derived from corpus, the Latin word for body or a “body of persons”. In the time of Justinian (reigned 527-565), Roman law recognized a number of societies under the names of Universitas, Corpus or Collegium.

After the farewell of the Lex Julia during the reign of Julius Caesar as consul and dictator of the Roman Republic (49-44 BC) and its confirmation during the reign of Caesar Augustus as Princeps senatus and emperor of the Roman army (27 BC-14 AD), the colleges required the consent of the Roman Senate or the emperor, to be admitted as legal entities. [8] These included the state itself (the Populus Romanus), municipalities and these private associations as sponsors of a religious cult, funeral societies, political groups and guilds of craftsmen or traders. These bodies generally have the right to own property and enter into contracts, to receive gifts and legacies, to sue and be sued and, in general, to perform legal acts through agents. [9] Private associations received certain privileges and freedoms from the emperor. [10] The day-to-day operations of a corporation are generally controlled by persons appointed by the members.