Size - it can be very large or small.. The term corporation, a form of business, has no standardized definition. The United States Supreme Court in the Dartmouth College case described it as follows:
- A corporation is an artifical being, invisible, intangible, and existing only in contemplation of law. Being a mere creature of law, it possesses only those properties which the charter of its creation confers upon it, either expressly, or as incidental to its very existence.
There are different types of corporations which have different attributes, rules and legal issues depending upon the ownership structure. There are .. Don't draw too much distinctino in regards to law because in recent ways... In foreign countries, there is usually a clear distinction.. Both of these corporations have "Inc." afterwards..
The economic impact of the corporate format is significant, since it is the form chosen by most large enterprises. Its owners are called shareholders.
When there is a group of shareholders constituting the majority who control the business and another group is in the minority, issues may arise as to their relationships and the control group taking advantage of the minority. In some publichly traded corporations, a group of sharehodlers (maybe the founders or their family) or another corporation may retain control and thus the public shareholders are minority shareholders.
Legal Characteristics of Corporations
- Legal entity - this is a formalism pt; it is a person in the eyes of the law. It is a distinct legal entity because it is distinct from everyone else, including its owners. For instance, in the CHC example with two people owners, there are three (the business is also counted)
- Formed through formalities - there is no such thing as an accidental corporation; however, there are accidental partnerships. The articles of incorporation must be filed.
- Shares reflect ownership - when formed Davis corp, in return get issued shares of stock.
- Management centralized - this management structure is provided to us by statute; the shareholders, the owners of the corporation do not directly manage the corporation. Instead, management is centralized (whether closely or publicly held), shareholders elect a board of directors will be responsible for overseeing the operations of the corporation and establishing corporate policy. There is nothing stoppping someone from being a shareholder as well as a worker... One of the most important things are board of directors must do is to appoint officers of a corporatino and the top officer is CEO... So, at Davis, have .. So, theoretically or actually, in a closely-held corporation, a person can be a: director, officer, and shareholder..
- Perpetual existence - or, otherwise said, a corporation has an unlimited life. This flows from the idea that it is a legal action; thsu, until action is taken to dissolve it, it will continue in existence. Thus, the corporation can outlast the founders (although, it could into bankruptcy, fail to pay taxes, etc). This is a major distinction between the corporation and the partnership..
- Limited liability -
- No uniformity of law - there is something called the Revised ..., but they are fly-over states versus California, Texas, all have their corporation codes. Thus, this forces you to determine, which code applies. This is important ebcause it regulates the relationships within the corporation. Thus, will it be California law or something else that applies...
- SH. relations - mandatory/contractual - these are largely dictated by statute (mandatory principles of con); corporate law has traditionally been mandatory; it sets for the relationships or the structure. In contrast, partnership law is more contractual; thus, here is a relationship, but you can create a contract that alters this system (thus, the statutue is used by default - if there is nothing else).
- double taxation - see taxation
Concepts related to corporations