Corporations law
From Wikipedia, the free encyclopedia
 |
| Business law |
|---|
| Business organizations |
| Basic forms: |
| Sole proprietorship |
| Corporation |
| Partnership (General · Limited · LLP) |
| Cooperative |
| USA: |
| Business trust · LLC · LLLP Series LLC Delaware corporation Nevada corporation |
| Commonwealth/Ireland/UK: |
| Limited company (By shares · By guarantee) (Public · Proprietary) |
| Civil law countries: |
| AB · AG · ANS · A/S · A/S |
| K.K. · N.V. · OY · S.A. · GmbH |
| European Company Statute |
| Doctrines |
| Corporate governance |
| Limited liability · Ultra vires |
| Business judgment rule |
| De facto corporation and corporation by estoppel |
| Piercing the corporate veil |
| Related areas of law |
| Contract · Civil procedure |
Corporations law or corporate law is the field of law concerning the creation and regulation of corporations and other business organizations. A corporation is a juristic person that is legally treated, in certain instances, as a person; the corporation can own property, execute contracts, sue, and be sued. In British practice, corporate law is more often called company law.
Corporate law also includes the law governing the relationships among various constituents of a corporation such as shareholders, directors and management. By way of illustrative example, the following are questions of corporate law:
- Under what circumstances may a corporation engage in a transaction (such as renting property) with a director? (see: conflict of interest, Duty of Loyalty)
- How are the directors and officers of a corporation chosen?
- What responsibilities does a director, an officer, or a majority shareholder owe to the corporation or to other shareholders? (see: fiduciary duty)
- What actions may be undertaken by the officers of a corporation in their capacity as such, and what actions require the approval of the directors or of the shareholders? (see: corporate governance)
- How may one corporation merge, consolidate with, or otherwise acquire another?
- What are the procedures for calling and holding a meeting of the shareholders or of the directors of a corporation?
- How may a corporation be dissolved, and what are the consequences of dissolving it?
- How may a corporation issue stock, and what rights does a shareholder have with respect to the corporation?
Corporate law also sometimes includes securities laws, which govern the conditions under which corporations can issue shares and is aimed at preventing fraudulent offering schemes.
Corporate law is generally considered to be distinct from the fields of law that are principally concerned with the relationship between a corporation and a third party, such as commercial law, antitrust law, and environmental law.
[edit] Corporate law in the United States
In the United States, corporations are generally incorporated, or organized, under the laws of a particular state. The corporate law of a corporation's state of incorporation generally governs that corporation's internal governance (even if the corporation's operations take place outside of that state). The corporate laws of the various states differ - in some cases significantly - from state to state, as a result of which corporate lawyers are often consulted in an effort to determine the most appropriate or advantageous state in which to incorporate, and a majority of public companies in the U.S. are Delaware corporations.[1] The federal laws of the United States and local law may also be applicable sources of corporate law.
[edit] Early American corporations theory
“A corporation is described to be a person in a political capacity created by the law, to endure in perpetual succession.” (Wilson, James. Lectures on Law, delivered 1790-91 at University of Pennsylvania, Vol. II, ch. X, “Of corporations.”) Americans in the 1790s knew of a variety of corporations, and it may be that they were becoming more aware of that variety than we are today. Some were clearly distinguished by the interests which they were intended to promote and perpetuate: those of commerce, education, and religion. As the law of corporations was articulated by the Supreme Court under Chief Justice Marshall, over the first several decades of the new American state, emphasis fell, in a way which seems natural to us today, upon commercial corporations. Nonetheless, at least one early American legal thinker saw that, in all cases, corporations “should be erected with caution, and inspected with care.” (Ibid.)
The actions of corporations were clearly circumscribed: “To every corporation a name must be assigned; and by that name alone it can perform legal acts.” (Ibid.) For non-binding external actions or transactions, corporations enjoyed the same latitude as private individuals; but it was with an eye to internal affairs that many saw principal advantage in incorporation. The power of making by-laws was “tacitly annexed to corporations by the very act of their establishment.” (Ibid.). While they must not directly contradict the overarching laws of the land, the central or local government cannot be expected to regulate toward the peculiar circumstances of a given body, and so “they are invested with authority to make regulations for the management of their own interests and affairs.” (Ibid.)
The question then arises: if corporations are to be inspected with care, what - if not the commercial or social conduct, or the by-laws - is to be inspected – and by whom? Do corporations have duties? Yes: “The general duties of every corporation may be collected from the nature and design of its institution: it should act agreeably to its nature, and fulfill the purposes for which it was formed.” (Ibid.) Who sees that corporations are living up to those duties? “The law has provided proper persons with proper powers to visit those institutions, and to correct every irregularity, which may arise within them.” (Ibid.) The Common Law provided for inspection by the court of king’s bench. In 1790, at least, “the powers of the court of king's bench [were] vested in the supreme court of Pennsylvania.” (Ibid.)
As for the dissolution of corporations, there seems not to have been much question that a corporation might “surrender its legal existence into the hands of that power, from which it was received. From such a surrender, the dissolution of the body corporate ensues.” (Ibid.) Nor does there seem to have been much question that by “a judgment of forfeiture against a corporation itself, it may be dissolved.” (Ibid.) However, Supreme Court Justice Wilson, lecturing in his unofficial capacity, at least, suggests his displeasure with the doctrine that corporate dissolution cannot be predicated “by a judgment of ouster against individuals. God forbid ― such is the sentiment of Mr. Justice Wilmot ― that the rights of the body should be lost or destroyed by the offences of the members.” (Ibid.)
[edit] See also
- Business ethics
- Company (law)
- Corporate crime
- Corporate Lawyer
- Juristic person
- Delaware corporation
- European Company Statute
