Corporation

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This article is about business corporations. For other uses, see Corporation (disambiguation).
A corporation is a formal business association with a publicly registered charter recognizing it
as a separate legal entity having its own privileges, and liabilities distinct from those of its
members.[1] There are many different forms of corporations, most of which are used to conduct
business.
Corporations exist as a product of corporate law, and their rules balance the interests of the
management who operate the corporation, creditors, shareholders, and employees who contribute
their labor.[2] In modern times, corporations have become an increasingly dominant part of life.
An important (but not universal) feature of a corporation is limited liability. If a corporation fails,
shareholders normally only stand to lose their investment, and employees will lose their jobs, but
neither will be further liable for debts that remain owing to the corporation's creditors.
Despite not being natural persons, corporations are recognized by the law to have rights and
responsibilities like natural persons ("people"). Corporations can exercise human rights against
real individuals and the state,[3] and they are often responsible for human rights violations.[4] Just
as they are "born" into existence through its members obtaining a certificate of incorporation,
they can "die" when they are "dissolved" either by statutory operation, order of court, or
voluntary action on the part of shareholders. Insolvency may result in a form of corporate 'death',
when creditors force the liquidation and dissolution of the corporation under court order,[5] but it
most often results in a restructuring of corporate holdings. Corporations can even be convicted of
criminal offenses, such as fraud and manslaughter.[6]
Although corporate law varies in different jurisdictions, there are four core characteristics of the
business corporation:[7]
 Legal personality
 Limited liability
 Transferable shares
 Centralized management under a board structure
Contents
[hide]
 1 History
o 1.1 Mercantilism
o 1.2 Modern corporations
 2 Corporate law
o 2.1 Ownership and control
o 2.2 Formation
o 2.3 Naming
o 2.4 Financial disclosure
o 2.5 Unresolved issues
 3 Types
o 3.1 For-profit and non-profit
 o 3.2 Closely held corporations and publicly traded corporations
o 3.3 Mutual benefit corporations
 4 Corporations globally
o 4.1 Australia
o 4.2 Brazil
o 4.3 Canada
o 4.4 German-speaking countries
o 4.5 Italy
o 4.6 Japan
o 4.7 Spain
o 4.8 United Kingdom and Republic Of Ireland
o 4.9 United States
 5 Corporate taxation
 6 Criticisms
 7 Other business entities
 8 See also
 9 Notes
 10 References
 11 Further reading
 12 External links

[edit] History
Main articles: History of corporations and List of oldest companies

1/8 share of the Stora Kopparberg mine, dated June 16, 1288.
The word "corporation" derives from corpus, the Latin word for body, or a "body of people."
Entities which carried on business and were the subjects of legal rights were found in ancient
Rome, and the Maurya Empire in ancient India.[8] In medieval Europe, churches became
incorporated, as did local governments, such as the Pope and the City of London Corporation.
The point was that the incorporation would survive longer than the lives of any particular
member, existing in perpetuity. The alleged oldest commercial corporation in the world, the
Stora Kopparberg mining community in Falun, Sweden, obtained a charter from King Magnus
Eriksson in 1347. Many European nations chartered corporations to lead colonial ventures, such
as the Dutch East India Company or the Hudson's Bay Company, and these corporations came to
play a large part in the history of corporate colonialism.
During the period of colonial expansion in the 17th century, the true progenitors of the modern
Corporation emerged as the "chartered company". Acting under a charter sanctioned by the
Dutch monarch, the Dutch East India Company (VOC), defeated Portuguese forces and
established itself in the Moluccan Islands in order to profit from the European demand for spices.
Investors in the VOC were issued paper certificates as proof of share ownership, and were able
to trade their shares on the original Amsterdam stock exchange. Shareholders are also explicitly
granted limited liability in the company's royal charter.[9] In the late 18th century, Stewart Kyd,
the author of the first treatise on corporate law in English, defined a corporation as,
a collection of many individuals united into one body, under a special denomination, having
perpetual succession under an artificial form, and vested, by policy of the law, with the capacity
of acting, in several respects, as an individual, particularly of taking and granting property, of
contracting obligations, and of suing and being sued, of enjoying privileges and immunities in
common, and of exercising a variety of political rights, more or less extensive, according to the
design of its institution, or the powers conferred upon it, either at the time of its creation, or at
any subsequent period of its existence.
—[10]
[edit] Mercantilism
See also: Mercantilism and South Sea Bubble

A bond issued by the Dutch East India Company, dating from 1623, for the amount of 2,400
florins
Labeled by both contemporaries and historians as "the grandest society of merchants in the
universe",[citation needed] the British East India Company would come to symbolize the dazzlingly
rich potential of the corporation, as well as new methods of business that could be both brutal
and exploitive.[11] On 31 December 1600, the English monarchy granted the company a fifteen-
year monopoly on trade to and from the East Indies and Africa. By 1611, shareholders in the
East India Company were earning an almost 150% return on their investment. Subsequent stock
offerings demonstrated just how lucrative the Company had become. Its first stock offering in
1613-1616 raised ₤418,000, and its first offering in 1617-1622 raised ₤1.6 million.[12]
In the United States, government chartering began to fall out of vogue in the mid-19th century.
Corporate law at the time was focused on protection of the public interest, and not on the
interests of corporate shareholders. Corporate charters were closely regulated by the states.
Forming a corporation usually required an act of legislature. Investors generally had to be given
an equal say in corporate governance, and corporations were required to comply with the
purposes expressed in their charters. Many private firms in the 19th century avoided the
corporate model for these reasons (Andrew Carnegie formed his steel operation as a limited
partnership, and John D. Rockefeller set up Standard Oil as a trust). Eventually, state
governments began to realize the greater corporate registration revenues available by providing
more permissive corporate laws. New Jersey was the first state to adopt an "enabling" corporate
law, with the goal of attracting more business to the state.[13] Delaware followed, and soon
became known as the most corporation-friendly state in the country after New Jersey raised taxes
on the corporations, driving them out. New Jersey reduced these taxes after this mistake was
realized, but by then it was too late; even today, most major public corporations are set up under
Delaware law.
By the beginning of the 19th century, government policy on both sides of the Atlantic began to
change, reflecting the growing popularity of the proposition that corporations were riding the
economic wave of the future. In 1819, the U.S. Supreme Court granted corporations a plethora of
rights they had not previously recognized or enjoyed.[14] Corporate charters were deemed
"inviolable", and not subject to arbitrary amendment or abolition by state governments.[15] The
Corporation as a whole was labeled an "artificial person," possessing both individuality and
immortality.[16]
At around the same time, British legislation was similarly freeing the corporation from historical
restrictions. In 1844 the British Parliament passed the Joint Stock Companies Act, which allowed
companies to incorporate without a royal charter or an Act of Parliament.[17] Ten years later,
limited liability, the key provision of modern corporate law, passed into English law: in response
to increasing pressure from newly emerging capital interests, Parliament passed the Limited
Liability Act of 1855, which established the principle that any corporation could enjoy limited
legal liability on both contract and tort claims simply by registering as a "limited" company with
the appropriate government agency.[18]
This prompted the English periodical The Economist to write in 1855 that "never, perhaps, was a
change so vehemently and generally demanded, of which the importance was so much
overrated."[19] The glaring inaccuracy of the second part of this judgment was recognized by the
same magazine more than 75 years later, when it claimed that, "[t]he economic historian of the
future . . . may be inclined to assign to the nameless inventor of the principle of limited liability,
as applied to trading corporations, a place of honour with Watt and Stephenson, and other
pioneers of the Industrial Revolution."[20]
[edit] Modern corporations
By the end of the 19th century the Sherman Act, New Jersey allowing holding companies, and
mergers resulted in larger corporations with dispersed shareholders. (See The Modern
Corporation and Private Property [21] The well-known Santa Clara County v. Southern Pacific
Railroad decision began to influence policymaking and the modern corporate era had begun.
The 20th century saw a proliferation of enabling law across the world, which helped to drive
economic booms in many countries before and after World War I. Starting in the 1980s, many
countries with large state-owned corporations moved toward privatization, the selling of publicly
owned services and enterprises to corporations. Deregulation (reducing the regulation of
corporate activity) often accompanied privatization as part of a laissez-faire policy. Another
major postwar shift was toward the development of conglomerates, in which large corporations
purchased smaller corporations to expand their industrial base. Japanese firms developed a
horizontal conglomeration model, the keiretsu, which was later duplicated in other countries as
well.
[edit] Corporate law
Main article: Corporate law

Companies law

Company · Business

Company forms

Sole proprietorship

Partnership
(General · Limited · LLP)

Corporation
Cooperative

United States

S corporation · C corporation
LLC · LLLP · Series LLC
Delaware corporation
Nevada corporation
Massachusetts business trust

UK / Ireland / Commonwealth

Limited company
(by shares · by guarantee
Public · Proprietary)

Unlimited company
 Community interest company

European Union / EEA

SE · SCE · SPE · EEIG

Elsewhere

AB · AG · ANS · A/S · AS · GmbH

K.K. · N.V. · Oy · S.A. · more

Doctrines

Corporate governance
Limited liability · Ultra vires
Business judgment rule
Internal affairs doctrine

De facto corporation and

corporation by estoppel

Piercing the corporate veil

Rochdale Principles

Related areas

Contract · Civil procedure

v • d • e

The existence of a corporation requires a special legal framework and body of law that
specifically grants the corporation legal personality, and typically views a corporation as a
fictional person, a legal person, or a moral person (as opposed to a natural person). Corporate
statutes typically empower corporations to own property, sign binding contracts, and pay taxes in
a capacity separate from that of its shareholders (who are sometimes referred to as "members").
According to Lord Chancellor Haldane,
...a corporation is an abstraction. It has no mind of its own any more than it has a body of its
own; its active and directing will must consequently be sought in the person of somebody who is
really the directing mind and will of the corporation, the very ego and centre of the personality of
the corporation.
—[22]
The legal personality has two economic implications. First it grants creditors (as opposed to
shareholders or employees) priority over the corporate assets upon liquidation. Second, corporate
assets cannot be withdrawn by its shareholders, nor can the assets of the firm be taken by
personal creditors of its shareholders. The second feature requires special legislation and a
special legal framework, as it cannot be reproduced via standard contract law.[23]
The regulations most favorable to incorporation include:
Regulation Description
Unlike a partnership or sole proprietorship, shareholders of a modern business
corporation have "limited" liability for the corporation's debts and obligations.[24] As
a result, their losses cannot exceed the amount which they contributed to the
corporation as dues or payment for shares. This enables corporations to "socialize
their costs" for the primary benefit of shareholders; to socialize a cost is to spread it
to society in general.[25] The economic rationale for this is that it allows anonymous
trading in the shares of the corporation, by eliminating the corporation's creditors as
a stakeholder in such a transaction. Without limited liability, a creditor would
Limited
probably not allow any share to be sold to a buyer at least as creditworthy as the
liability
seller. Limited liability further allows corporations to raise large amounts of finance
for their enterprises by combining funds from many owners of stock. Limited
liability reduces the amount that a shareholder can lose in a company. This
increases the attraction to potential shareholders, and thus increases both the
number of willing shareholders and the amount they are likely to invest. However,
some jurisdictions also permit another type of corporation, in which shareholders'
liability is unlimited, for example the unlimited liability corporation in two
provinces of Canada, and the unlimited company in the United Kingdom.
Another advantage is that the assets and structure of the corporation may continue
beyond the lifetimes of its shareholders and bondholders. This allows stability and
the accumulation of capital, which is thus available for investment in larger and
longer-lasting projects than if the corporate assets were subject to dissolution and
distribution. This was also important in medieval times, when land donated to the
Perpetual
Church (a corporation) would not generate the feudal fees that a lord could claim
lifetime
upon a landholder's death. In this regard, see Statute of Mortmain. (However a
corporation can be dissolved by a government authority, putting an end to its
existence as a legal entity. But this usually only happens if the company breaks the
law, e.g. fails to meet annual filing requirements, or in certain circumstances if the
company requests dissolution.)
[edit] Ownership and control
Persons and other legal entities composed of persons (such as trusts and other corporations) can
have the right to vote or receive dividends once declared by the Board. In the case of for-profit
corporations, these voters hold shares of stock and are thus called shareholders or stockholders.
When no stockholders exist, a corporation may exist as a non-stock corporation (in the United
Kingdom, a "company limited by guarantee") and instead of having stockholders, the corporation
has members who have the right to vote on its operations. Voting members are not the only
members of a "Corporation". The members of a non-stock corporation are identified in the
Articles of Incorporation (UK equivalent: Articles of Association) and the titles of the member
classes may include "Trustee," "Active," "Associate," and/or "Honorary." However, each of
these listed in the Articles of Incorporation are members of the Corporation. The Articles of
Incorporation may define the "Corporation" by another name, such as "The ABC Club, Inc." and,
in which case, the "Corporation" and "The ABC Club, Inc." or just "The Club" are considered
synonymous and interchangeable as they may appear elsewhere in the Articles of Incorporation
or the By-Laws. If the non-stock corporation is not operated for profit, it is called a not-for-profit
corporation. In either category, the corporation comprises a collective of individuals with a
distinct legal status and with special privileges not provided to ordinary unincorporated
businesses, to voluntary associations, or to groups of individuals.
There are two broad classes of corporate governance forms in the world. In most of the world,
control of the corporation is determined by a board of directors which is elected by the
shareholders. In some jurisdictions, such as Germany, the control of the corporation is divided
into two tiers with a supervisory board which elects a managing board. Germany is also unique
in having a system known as co-determination in which half of the supervisory board consists of
representatives of the employees. The CEO, president, treasurer, and other titled officers are
usually chosen by the board to manage the affairs of the corporation.
In addition to the limited influence of shareholders, corporations can be controlled (in part) by
creditors such as banks. In return for lending money to the corporation, creditors can demand a
controlling interest analogous to that of a member, including one or more seats on the board of
directors. In some jurisdictions, such as Germany and Japan, it is standard for banks to own
shares in corporations whereas in other jurisdictions such as the United States, under the Glass-
Steagall Act of 1933, and the United Kingdom, under the Bank of England, banks are prohibited
from owning shares in external corporations. However, since 1999 in the U. S., commercial
banks have been allowed to enter into investment banking through separate subsidiaries thanks to
the Financial Services Modernization Act or Gramm-Leach-Bliley Act. Since 1997, banks in the
U. K. are supervised by the Financial Services Authority; its rules are non-restrictive allowing
both foreign and domestic capital to operate all financial institutions, including insurance,
commercial and financial banking.[26]
Upon the Board's decision to dissolve a for-profit corporation, shareholders receive the leftovers,
following creditors and others with interests in the corporation. However shareholders receive
the benefit of limited liability, so they are liable only for the amount they contributed.
[edit] Formation
Historically, corporations were created by a charter granted by government. Today, corporations
are usually registered with the state, province, or national government and regulated by the laws
enacted by that government. Registration is the main prerequisite to the corporation's assumption
of limited liability. The law sometimes requires the corporation to designate its principal address,
as well as a registered agent (a person or company designated to receive legal service of
process). It may also be required to designate an agent or other legal representative of the
corporation.
Generally, a corporation files articles of incorporation with the government, laying out the
general nature of the corporation, the amount of stock it is authorized to issue, and the names and
addresses of directors. Once the articles are approved, the corporation's directors meet to create
bylaws that govern the internal functions of the corporation, such as meeting procedures and
officer positions.
The law of the jurisdiction in which a corporation operates will regulate most of its internal
activities, as well as its finances. If a corporation operates outside its home state, it is often
required to register with other governments as a foreign corporation, and is almost always
subject to laws of its host state pertaining to employment, crimes, contracts, civil actions, and the
like.
[edit] Naming
Corporations generally have a distinct name. Historically, some corporations were named after
their membership: for instance, "The President and Fellows of Harvard College." Nowadays,
corporations in most jurisdictions have a distinct name that does not need to make reference to
their membership. In Canada, this possibility is taken to its logical extreme: many smaller
Canadian corporations have no names at all, merely numbers based on their Provincial Sales Tax
registration number (e.g., "12345678 Ontario Limited").
In most countries, corporate names include the term "Corporation", or an abbreviation that
denotes the corporate status of the entity (e.g. "Incorporated" or "Inc." in the United States), or
the limited liability of its members (e.g. "Limited" or "Ltd."). These terms vary by jurisdiction
and language. In some jurisdictions they are mandatory, and in others they are not.[27] Their use
puts everybody on constructive notice that they are dealing with an entity whose liability is
limited, and does not reach back to the persons who own the entity: one can only collect from
whatever assets the entity still controls when one obtains a judgment against it.
Certain jurisdictions do not allow the use of the word "company" alone to denote corporate
status, since the word "company" may refer to a partnership or to a sole proprietorship (in United
States usage, but not generally in British usage), or even, archaically, to a group of not
necessarily related people (for example, those staying in a tavern).
[edit] Financial disclosure
In many jurisdictions, corporations whose shareholders benefit from limited liability are required
to publish annual financial statements and other data, so that creditors who do business with the
corporation are able to assess the creditworthiness of the corporation and cannot enforce claims
against shareholders.[28] Shareholders therefore sacrifice some loss of privacy in return for limited
liability. This requirement generally applies in Europe, but not in the United States, except for
publicly traded corporations, where financial disclosure is required for investor protection.
[edit] Unresolved issues
The nature of the corporation continues to evolve in response to new situations as existing
corporations promote new ideas and structures, the courts respond, and governments issue new
regulations. A question of long standing is that of diffused responsibility. For example, if a
corporation is found liable for a death, how should culpability and punishment for it be allocated
among shareholders, directors, management and staff, and the corporation itself? See corporate
liability, and specifically, corporate manslaughter.
The law differs among jurisdictions, and is in a state of flux. Some argue that shareholders
should be ultimately responsible in such circumstances, forcing them to consider issues other
than profit when investing, but a corporation may have millions of small shareholders who know
nothing about its business activities. Moreover, traders — especially hedge funds — may turn
over shares in corporations many times a day.[29] The issue of corporate repeat offenders (see H.
Glasbeak, "Wealth by Stealth: Corporate Crime, Corporate Law, and the Perversion of
Democracy" (Between the Lines Press: Toronto 2002) raises the question of the so-called "death
penalty for corporations."[30]
[edit] Types
This section needs additional citations for verification.
Please help improve this article by adding reliable references. Unsourced material may be challenged
and removed. (February 2009)
For a list of types of corporation and other business types by country, see Types of
business entity.
Most corporations are registered with the local jurisdiction as either a stock corporation or a non-
stock corporation. Stock corporations sell stock to generate capital. A stock corporation is
generally a for-profit corporation. A non-stock corporation does not have stockholders, but may
have members who have voting rights in the corporation.
Some jurisdictions (Washington, D.C., for example) separate corporations into for-profit and
non-profit, as opposed to dividing into stock and non-stock.
Several states also allow a variation of the corporation for use by professionals (i.e., those
individuals typically considered as professionals who require a license from the state to conduct
business). In some states, such as Georgia, these corporations are known as "professional
corporations".
[edit] For-profit and non-profit
Main article: non-profit organization
In modern economic systems, conventions of corporate governance commonly appear in a wide
variety of business and non-profit activities. Though the laws governing these creatures of statute
often differ, the courts often interpret provisions of the law that apply to profit-making
enterprises in the same manner (or in a similar manner) when applying principles to non-profit
organizations — as the underlying structures of these two types of entity often resemble each
other.
[edit] Closely held corporations and publicly traded corporations
This section does not cite any references or sources.
Please help improve this article by adding citations to reliable sources. Unsourced material may be
challenged and removed. (November 2009)
It has been suggested that this section be split into a new article titled closely held
corporation. (Discuss)
It has been suggested that this section be split into a new article titled publicly traded
corporation. (Discuss)
The institution most often referenced by the word "corporation" is a publicly traded
corporation, the shares of which are traded on a public stock exchange (e.g., the New York Stock
Exchange or Nasdaq in the United States) where shares of stock of corporations are bought and
sold by and to the general public. Most of the largest businesses in the world are publicly traded
corporations. However, the majority of corporations are said to be closely held, privately held
or close corporations, meaning that no ready market exists for the trading of shares. Many such
corporations are owned and managed by a small group of businesspeople or companies, although
the size of such a corporation can be as vast as the largest public corporations.
Closely held corporations do have some advantages over publicly traded corporations. A small,
closely held company can often make company-changing decisions much more rapidly than a
publicly traded company. A publicly traded company is also at the mercy of the market, having
capital flow in and out based not only on what the company is doing but the market and even
what the competitors are doing. Publicly traded companies also have advantages over their
closely held counterparts. Publicly traded companies often have more working capital and can
delegate debt throughout all shareholders. This means that people invested in a publicly traded
company will each take a much smaller hit to their own capital as opposed to those involved with
a closely held corporation. Publicly traded companies though suffer from this exact advantage. A
closely held corporation can often voluntarily take a hit to profit with little to no repercussions
(as long as it is not a sustained loss). A publicly traded company though often comes under
extreme scrutiny if profit and growth are not evident to stock holders, thus stock holders may
sell, further damaging the company. Often this blow is enough to make a small public company
fail.
Often communities benefit from a closely held company more so than from a public company. A
closely held company is far more likely to stay in a single place that has treated them well, even
if going through hard times. The shareholders can incur some of the damage the company may
receive from a bad year or slow period in the company profits. Closely held companies often
have a better relationship with workers. In larger, publicly traded companies, often when a year
has gone badly the first area to feel the effects are the work force with lay offs or worker hours,
wages or benefits being cut. Again, in a closely held business the shareholders can incur this
profit damage rather than passing it to the workers.
The affairs of publicly traded and closely held corporations are similar in many respects. The
main difference in most countries is that publicly traded corporations have the burden of
complying with additional securities laws, which (especially in the U.S.) may require additional
periodic disclosure (with more stringent requirements), stricter corporate governance standards,
and additional procedural obligations in connection with major corporate transactions (e.g.
mergers) or events (e.g. elections of directors).
A closely held corporation may be a subsidiary of another corporation (its parent company),
which may itself be either a closely held or a public corporation.
Most United States businesses are closely held corporations. Ninety-five percent are family
owned, and provide employment for approximately fifty percent of the nation's population.
However, largely because of shareholder dissension, just twenty percent of family-owned
businesses survive longer than a generation.[31] Closely held corporations also have greater
potential for shareholder oppression since minority shareholders cannot escape mistreatment by
selling their stock on a public market and exiting the corporation.[32]
[edit] Mutual benefit corporations
A mutual benefit nonprofit corporation is a corporation formed in the United States solely for the
benefit of its members. An example of a mutual benefit nonprofit corporation is a golf club.
Individuals pay to join the club, memberships may be bought and sold, and any property owned
by the club is distributed to its members if the club dissolves. The club can decide, in its
corporate bylaws, how many members to have, and who can be a member. Generally, while it is
a nonprofit corporation, a mutual benefit corporation is not a charity. Because it is not a charity,
a mutual benefit nonprofit corporation cannot obtain 501(c)(3) status. If there is a dispute as to
how a mutual benefit nonprofit corporation is being operated, it is up to the members to resolve
the dispute since the corporation exists to solely serve the needs of its membership and not the
general public.[33]
[edit] Corporations globally
Main article: Multinational corporation
Following on the success of the corporate model at a national level, many corporations have
become transnational or multinational corporations: growing beyond national boundaries to
attain sometimes remarkable positions of power and influence in the process of globalizing.
The typical "transnational" or "multinational" may fit into a web of overlapping shareholders and
directorships, with multiple branches and lines in different regions, many such sub-groupings
comprising corporations in their own right. Growth by expansion may favor national or regional
branches; growth by acquisition or merger can result in a plethora of groupings scattered around
and/or spanning the globe, with structures and names which do not always make clear the
structures of shareholder ownership and interaction.
In the spread of corporations across multiple continents, the importance of corporate culture has
grown as a unifying factor and a counterweight to local national sensibilities and cultural
awareness.
[edit] Australia
Main article: Corporations Act 2001
In Australia corporations are registered and regulated by the Commonwealth Government
through the Australian Securities and Investments Commission. Corporations law has been
largely codified in the Corporations Act 2001.
[edit] Brazil
In Brazil there are many different types of corporations ("sociedades"), but the two most
common ones commercially speaking are: (i) "sociedade limitada", identified by "Ltda." after the
company's name, equivalent to the British limited company, and (ii) "sociedade anônima" or
"companhia", identified by "SA" or "Companhia" in the company's name, equivalent to the
British public limited company. The "Ltda." is mainly governed by the new Civil Code, enacted
in 2002, and the "SA" by the Law 6.404 dated 15 December 1976.
[edit] Canada
Main article: Canadian corporation
In Canada both the federal government and the provinces have corporate statutes, and thus a
corporation may have a provincial or a federal charter. Many older corporations in Canada stem
from Acts of Parliament passed before the introduction of general corporation law. The oldest
corporation in Canada is the Hudson's Bay Company; though its business has always been based
in Canada, its Royal Charter was issued in England by King Charles II in 1670, and became a
Canadian charter by amendment in 1970 when it moved its corporate headquarters from London
to Canada. Federally recognized corporations are regulated by the Canada Business Corporations
Act.
[edit] German-speaking countries
Main article: Aktiengesellschaft
Germany, Austria, Switzerland and Liechtenstein recognize two forms of corporation: the
Aktiengesellschaft (AG), analogous to public corporations in the English-speaking world, and
the Gesellschaft mit beschränkter Haftung (GmbH), similar to (and an inspiration for) the
modern limited liability company.
[edit] Italy
The Italian Republic recognizes three types of company with limited liability: "S.r.l", or "Società
a responsabilità limitata" (a private limited company), "S.p.A" or "Società per Azioni" (a joint-
stock company, similar to a Public Limited Company in the United Kingdom), and "S.a.p.a"
("Società in Accomandita per Azioni"). The latter is a hybrid form that involves two categories
of shareholders, some with and some without limited liability, and is rarely used in practice.
[edit] Japan
In Japan, both the state and local public entities under the Local Autonomy Law (prefectures and
municipalities) are considered to be corporations (法人 hōjin?). Non-profit corporations may be
established under the Civil Code.
The term "company" (会社 kaisha?) is used to refer to business corporations. The predominant
form is the kabushiki kaisha (株式会社), used by public corporations as well as smaller
enterprises. Mochibun kaisha (持分会社), a form for smaller enterprises, are becoming
increasingly common. Between 2002 and 2008, the intermediary corporation (中間法人 chūkan
hōjin?) existed to bridge the gap between for-profit companies and non-governmental and non-
profit organizations.
[edit] Spain
In Spain there are two types of companies: with limited liability called "S.L", or "Sociedad
Limitada" (a private limited company) and "S.A." or "Sociedad Anónima" (similar to a Public
Limited Company).
[edit] United Kingdom and Republic Of Ireland
Main article: UK company law
In the United Kingdom, 'corporation' most commonly refers to a body corporate formed by
Royal Charter or by statute, of which few now remain. The BBC is the oldest and best known
corporation within the UK that is still in existence. Others, such as the British Steel Corporation,
were privatized in the 1980s.
In the private sector, corporations are referred to in law as companies, and are regulated by the
Companies Act 2006 (or the Northern Ireland equivalent). The most common type of company is
the private limited company ("Limited" or "Ltd."). Private limited companies can either be
limited by shares or by guarantee. Other corporate forms include the public limited company
("PLC") and the private unlimited company, and companies limited by guarantee.
The Republic of Ireland, since 1922 has its own sovereign company law which is broadly similar
to that of Britain, since it evolved from the British laws.
In the United Kingdom, 'corporation' can also refer to a corporation sole, which is an office held
by an individual natural person, and has a legal entity separate from that person.
[edit] United States
See also: Delaware corporation
Several types of conventional corporations exist in the United States. Generically, any business
entity that is recognized as distinct from the people who own it (i.e., is not a sole proprietorship
or a partnership) is a corporation. This generic label includes entities that are known by such
legal labels as ‘association’, ‘organization’ and ‘limited liability company’, as well as
corporations proper.
Only a company that has been formally incorporated according to the laws of a particular state is
called ‘corporation’. A corporation was defined in the Dartmouth College case of 1819, in which
Chief Justice Marshall of the United States Supreme Court stated that " A corporation is an
artificial being, invisible, intangible, and existing only in contemplation of the law". A
corporation is a legal entity, distinct and separate from the individuals who create and operate it.
As legal entity the corporation can acquire, own, and dispose of property in its own name like
buildings, land and equipment. It can also incur liabilities and enter into contracts like
franchising and leasing. American corporations can be either profit-making companies or non-
profit entities. Tax-exempt non-profit corporations are often called “501(c)3 corporation”, after
the section of the Internal Revenue Code that addresses the tax exemption for many of them.
Corporations are created by filing the requisite documents with a particular state government.
The process is called “incorporation,” referring to the abstract concept of clothing the entity with
a "veil" of artificial personhood (embodying, or “corporating” it, ‘corpus’ being the Latin word
for ‘body’). Only certain corporations, including banks, are chartered. Others simply file their
articles of incorporation with the state government as part of a registration process.
The federal government can only create corporate entities pursuant to relevant powers in the U.S.
Constitution. For example, Congress has constitutional power to provide postal services, so it has
power to operate the United States Postal Service.
Once incorporated, the corporation has artificial personhood everywhere it may operate, until
such time as the corporation may be dissolved. A corporation that operates in one state while
being incorporated in another is a “foreign corporation.” This label also applies to corporations
incorporated outside of the United States. Foreign corporations must usually register with the
secretary of state’s office in each state to lawfully conduct business in that state.
A corporation is legally a citizen of the state (or other jurisdiction) in which it is incorporated
(except when circumstances direct the corporation be classified as a citizen of the state in which
it has its head office, or the state in which it does the majority of its business). Corporate
business law differs from state to state, and many prospective corporations choose to incorporate
in a state whose laws are most favorable to its business interests. Many large corporations are
incorporated in Delaware, for example, without being physically located there because that state
has very favorable corporate tax and disclosure laws.
Companies set up for privacy or asset protection often incorporate in Nevada, which does not
require disclosure of share ownership. Many states, particularly smaller ones, have modeled their
corporate statutes after the Model Business Corporation Act, one of many model sets of law
prepared and published by the American Bar Association.
As juristic persons, corporations have certain rights that attach to natural persons. The vast
majority of them attach to corporations under state law, especially the law of the state in which
the company is incorporated – since the corporations very existence is predicated on the laws of
that state. A few rights also attach by federal constitutional and statutory law, but they are few
and far between compared to the rights of natural persons. For example, a corporation has the
personal right to bring a lawsuit (as well as the capacity to be sued) and, like a natural person, a
corporation can be libeled.
But a corporation has no constitutional right to freely exercise its religion because religious
exercise is something that only "natural" persons can do. That is, only human beings, not
business entities, have the necessary faculties of belief and spirituality that enable them to
possess and exercise religious beliefs.
Harvard College (a component of Harvard University), formally the President and Fellows of
Harvard College (also known as the Harvard Corporation), is the oldest corporation in the
western hemisphere. Founded in 1636, the second of Harvard’s two governing boards was
incorporated by the Great and General Court of Massachusetts in 1650. Significantly,
Massachusetts itself was a corporate colony at that time – owned and operated by the
Massachusetts Bay Company (until it lost its charter in 1684) - so Harvard College is a
corporation created by a corporation.
Many nations have modeled their own corporate laws on American business law. Corporate law
in Saudi Arabia, for example, follows the model of New York State corporate law. In addition to
typical corporations in the United States, the federal government, in 1971 passed the Alaska
Native Claims Settlement Act (ANCSA), which authorized the creation of 12 regional native
corporations for Alaska Natives and over 200 village corporations that were entitled to a
settlement of land and cash. In addition to the 12 regional corporations, the legislation permitted
a thirteenth regional corporation without a land settlement for those Alaska Natives living out of
the State of Alaska at the time of passage of ANCSA.
[edit] Corporate taxation
Main article: Corporate tax
In many countries corporate profits are taxed at a corporate tax rate, and dividends paid to
shareholders are taxed at a separate rate. Such a system is sometimes referred to as "double
taxation", because any profits distributed to shareholders will eventually be taxed twice. One
solution to this (as in the case of the Australian and UK tax systems) is for the recipient of the
dividend to be entitled to a tax credit which addresses the fact that the profits represented by the
dividend have already been taxed. The company profit being passed on is therefore effectively
only taxed at the rate of tax paid by the eventual recipient of the dividend. In other systems,
dividends are taxed at a lower rate than other income (e.g. in the US) or shareholders are taxed
directly on the corporation's profits and dividends are not taxed (e.g. S corporations in the US).
[edit] Criticisms
Main article: Criticisms of Corporations
As Adam Smith pointed out in the Wealth of Nations, when ownership is separated from
management (i.e. the actual production process required to obtain the capital), the latter will
inevitably begin to neglect the interests of the former, creating dysfunction within the company.
[34]
Some maintain that recent events in corporate America may serve to reinforce Smith's
warnings about the dangers of legally protected collectivist hierarchies.[35]
[edit] Other business entities
Main article: Types of business entity
Almost every recognized type of organization carries out some economic activities (e.g. the
family). Other organizations that may carry out activities that are generally considered to be
business exist under the laws of various countries. These include:
 Consumers' cooperative
 Holding company
 Limited company (Ltd.)
 Limited liability company (LLC)
 Limited liability limited partnership (LLLP)
 Limited liability partnership (LLP)
 Limited partnership (LP)
 Low-profit limited liability company (L3C)
 Not-for-profit corporation
 Partnership
 Sole proprietorship
 Trust company, Trust law
[edit] See also
Law
 Corporate law
 United Kingdom company law
 United States corporate law
 German company law
 European company law
 Commercial law
Other
 Alaska Native Corporation
 Anti-corporate activism
 Blocker corporation
 Community interest company
 Company (law)
 Conglomerate (company)
 Cooperative
 Corporate crime
 Corporate governance
 Corporate haven
 Corporate scandals
 Corporate welfare
 Corporatism
 Finance capitalism
 Good standing
 Guild
 Incorporation (business)
 List of strikes
  Megacorporation (fictional)
 Multinational corporation
 Organizational culture
 Preferred stock
 Professional corporation (PC or P.C.)
 Public limited company (PLC)
 Registered Agent
 Shelf Corporation
 Stock certificates
 State-owned Corporation
 The Corporation − A documentary film that discusses the nature and influence of modern
corporations.
 Unlimited company
 Unlimited liability corporation
 When Corporations Rule the World
[edit] Notes
1. ^ Dictionary.Reference.com
2. ^ Frank Easterbrook, Daniel R. Fischel. 'The Economic Structure of Corporate Law' (1996)
3. ^ e.g. South African Constitution Art.8, especially Art.(4)
4. ^ Phillip I. Blumberg, The Multinational Challenge to Corporation Law: The Search for a New
Corporate Personality, (1993) has a very good discussion of the controversial nature of additional
rights being granted to corporations.
5. ^ See, for example, the Business Corporations Act (B.C.) [SBC 2002] CHAPTER 57, Part 10
6. ^ e.g. Corporate Manslaughter and Corporate Homicide Act 2007
7. ^ RC Clark, Corporate Law (Aspen 1986) 2; See also, Hansmann et al., The Anatomy of
Corporate Law (2004) Ch.1, p.2; C. A. Cooke, Corporation, Trust and Company: A Legal
History, (1950).
8. ^ Vikramaditya S. Khanna (2005). The Economic History of the Corporate Form in Ancient
India. University of Michigan.
9. ^ Om Prakash, European Commercial Enterprise in Pre-Colonial India (Cambridge University
Press, Cambridge 1998).
10. ^ A Treatise on the Law of Corporations, Stewart Kyd (1793-1794)
11. ^ John Keay, The Honorable Company: A History of the English East India Company
(MacMillan, New York 1991).
12. ^ Ibid. at 113.
13. ^ The Law of Business Organizations
14. ^ Trustees of Dartmouth College v. Woodward, 17 U.S. 518 (1819).
15. ^ Id. at 25.
16. ^ Id. at 45.
17. ^ Sean M. O'Connor, Be Careful What You Wish For: How Accountants and Congress Created
the Problem of Auditor Independence, 45 B.C.L. Rev. 741, 749 (2004).
18. ^ Limited Liability Act, 18 & 19 Vict., ch. 133 (1855)(Eng.), cited in Paul G. Mahoney, Contract
or Concession? An Essay on the History of Corporate Law, 34 Ga. L. Rev. 873, 892 (2000).
19. ^ Graeme G. Acheson & John D. Turner, The Impact of Limited Liability on Ownership and
Control: Irish Banking, 1877-1914, School of Management and Economics, Queen's University
of Belfast, available at [1].
 20. ^ Economist, December 18, 1926, at 1053, as quoted in Mahoney, supra, at 875.
21. ^ For a comparison of the differences between the "Classic Corporation" (before 1860) and the
"Modern Corporation" (after 1900), see Ted Nace, Gangs of America: The Rise of Corporate
Power and the Disabling of Democracy 71 (Berrett-Koehler Publishers, Inc., San Francisco
2003).
22. ^ Lennard's Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705
23. ^ Hansmann et al., The Anatomy of Corporate Law, pg 7.
24. ^ A leading case in common law is Salomon v. Salomon & Co. [1897] AC 22.
25. ^ Hock, Dee (2005). One from many. Berrett-Koehler Publishers. p. 140. ISBN 1576753323. "...
they have become a superb instrument for the capitalization of gain and the socialization of cost."
26. ^ Grosse, Robert E. (2004). The future of global financial services. Wiley-Blackwell. pp. 57–62.
ISBN 1405117005.
27. ^ The U.S. state of California is an example of a jurisdiction that does not require corporations to
indicate corporate status in their names, except for close corporations. The drafters of the 1977
revision of the California General Corporation Law considered the possibility of forcing all
California corporations to have a name indicating corporate status, but decided against it because
of the huge number of corporations that would have had to change their names, and the lack of
any evidence that anyone had been harmed in California by entities whose corporate status was
not immediately apparent from their names. However, the 1977 drafters were able to impose the
current disclosure requirement for close corporations. See Harold Marsh, Jr., R. Roy Finkle,
Larry W. Sonsini, and Ann Yvonne Walker, Marsh's California Corporation Law, 4th ed., vol. 1
(New York: Aspen Publishers, 2004), 5-15 — 5-16.
28. ^ Hicks, A. and Goo, S.H. (2008) Cases and Materials on Company Law Oxford University
Press Chapter 4
29. ^ See, for example, the Ontario's Environmental Protection Act.
30. ^ CorpWatch : The Death Penalty for Corporations Comes of Age
31. ^ A Chernichaw (1994), Oppressed Shareholders in Close Corporations: A Market-Oriented
Statutory Remedy, Cardozo L. Rev., https://litigation-essentials.lexisnexis.com/webcd/app?
action=DocumentDisplay&crawlid=1&crawlid=1&doctype=cite&docid=16+Cardozo+L.+Rev.
+501&srctype=smi&srcid=3B15&key=116829fdc5d5fc91ce646dd032dc16c4
32. ^ Means, Benjamin (October 15, 2008), A Voice-Based Framework for Evaluating Claims of
Minority Shareholder Oppression in the Close Corporation, 97, Georgetown Law Journal,
http://ssrn.com/abstract=1285204
33. ^ Official website of the Secretary of State, for the (United States) state of Vermont
34. ^ Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations 741 (Clarendon,
Oxford 1776).
35. ^ The fall of the Enron corporation stemmed largely from the company's attempt to create new
energy trading markets, and its strategy of trading paper wealth in order to maintain the
appearance of profitability. For a thorough analysis of Enron's missteps and ultimate destruction,
see Kurt Eichenwald, Conspiracy of Fools (Broadway Books, New York 20050.
[edit] References
 A.B. DuBois, The English Business Company after the Bubble Act, , (1938)
 A Comparative Bibliography: Regulatory Competition on Corporate Law
 Bishop Hunt, The Development of the Business Corporation in England (1936)
 Blumberg, Phillip I., The Multinational Challenge to Corporation Law: The Search for a
New Corporate Personality, (1993)
 Bromberg, Alan R. Crane and Bromberg on Partnership. 1968.
 Bruce Brown, The History of the Corporation (2003)
  C. A. Cooke, Corporation, Trust and Company: A Legal History, (1950)
 Charles Freedman, Joint-stock Enterprise in France, : From Privileged Company to
Modern Corporation (1979)
 Conard, Alfred F. Corporations in Perspective. 1976.
 Dignam, A and Lowry, J (2006) Company Law, Oxford University Press ISBN 978-0-
19-928936-3
 Ernst Freund, MCMaster.ca, The Legal Nature of the Corporation (1897)
 Edwin Merrick Dodd, American Business Corporations until 1860, With Special
Reference to Massachusetts, (1954)
 John Micklethwait and Adrian Wooldridge. The Company: a Short History of a
Revolutionary Idea. New York: Modern Library. 2003.
 Frederick Hallis, Corporate Personality: A Study in Jurisprudence (1930)
 Hessen, Robert. In Defense of the Corporation. Hoover Institute. 1979. ISBN -X
 John P. Davis, Corporations (1904)
 John William Cadman, The Corporation in New Jersey: Business and Politics, , (1949)
 Joseph S. Davis, Essays in the Earlier History of American Corporations (1917)
 Klein and Coffee. Business Organization and Finance: Legal and Economic Principles.
Foundation. 2002. ISBN -X
 Radhe Shyam Rungta, The Rise of the Business Corporation in India, 1851–1900, (1970)
 Ramesh Chandra Majumdar, Corporate Life in Ancient India, (1920)
 Robert Charles Means, Underdevelopment and the Development of Law: Corporations
and Corporation Law in Nineteenth-century Colombia, (1980)
 Sobel, Robert. The Age of Giant Corporations: a Microeconomic History of American
Business. (1984)
 Thomas Owen, The Corporation under Russian Law, : A Study in Tsarist Economic
Policy (1991)
 W. R. Scott, Constitution and Finance of English, Scottish and Irish Joint-Stock
Companies to 1720 (1912)
[edit] Further reading
 Barnet, Richard; Ronald E. Muller (1974). Global Reach: The Power of the
Multinational Corporation. New York, NY: Simon & Schuster.
 Low, Albert, 2008. "Conflict and Creativity at Work: Human Roots of Corporate Life,
Sussex Academic Press. ISBN 978-1-84519-272-3
[edit] External links
Development: is it something so easy or so hard to define? How somebody can differentiate general development and social/community
development? Where lies the thin thread? I really wondering for simple answers.

Starting at 1 of 5 messages Outline

   
henrymaigurira - Mar 23, 2008 4:22 pm (#1 Total: 5)  

Thrust of development is adding value to an existing entity or phenomena. General development is varicoloured since the neccessity
to ascertain a spatial objective/ subjective value enhanced by another must be readable in a commensuarate fashion. Society is
broadly defined as cluster that makes up livelihoods sytematically to achieve their goals and ambitions planned and controled in
Posts: 33 respected forms of governance. Developing the necessary conditions which determines positively growth to effective socialisation
and acceptable competitive standards of living, respect for human rights, dignity all emanate from leadership and managerial
discourses of government, businesses corporate operations.
To diffrentiate general development and society/ community development is a matter of applicatin of theory to practice. After all development
policy in general aims to secure, training and education, and change anticipated for the better. Environmental management is a good example
of a community development program and related knowledge/ information systems towards sustainability.
Society/ community development would render economics and technology transfer to poorly infrastructure accessed area inseperable,
international assistence programs for country specific programs have unique approach towards a country 's sustainable path on the premise of
inherent good governance, peace and stability, country economic financial viability, adherence to international acceptable values and norms of
international law. Pillars of development are multifaceted and interlinked in society. So then "Should we allow natural resource development a
priority to redress global imbalances?"

Meaning of development?
In: Definitions and Word Differences, Human Behavior, Example Sentences [Edit categories]
Understanding the Wordwww.hallvworthington.com
Break through traditional teachings to truth and the word of life.
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Development - means a progression from a simpler or lower

to a more advanced, mature, or complex form or stage. It is
also defined as the gradual advancement or growth through
a series of progressive changes. Development is a process,
not a level. It is a path to achieve certain goals.

Read more: http://wiki.answers.com/Q/Meaning_of_development#ixzz16HkDju1T

ECONOMICS FOR DEVELOPMENT

Economic development is the development of economic wealth of countries or regions for the
well-being of their inhabitants. This is the short definition of Economic Development.
Economic Growth & development are two different terms used in economics.Generally
speaking economic development refers to the problems of underdeveloped countries and
economic growth to those of developed countries.
By Economic Growth we simply mean increase in per capita income or increase in GNP. In
recent literature, the term economic growth refers to sustained increase in a country's output
of goods and services, or more precisely product per capita. Output is generally measured in
terms of GNP.
The term economic development is far more comprehensive. It implies progressive changes
in the socio-economic structure of a country. Viewed in this way economic development
Involves a steady decline in agricultural shares in GNP and continuous increase in shares of
industries, trade banking construction and services. Further whereas economic growth
merely refers to rise in output; development implies change in technological and institutional
organization of production as well as in distributive pattern of income.
Hence, compared to the objective of development, economic growth is easy realize. By a
larger mobilization of resources and raising their productivity, output level can be raised. The
process of development is far more extensive. Apart from a rise in output, it involves changes
in composition of output, shift in the allocation of productive resources, and elimination or
reduction of poverty, inequalities and unemployment.
In the words of Amartya Sen "Development requires the removal of major sources of
unfreedom poverty as well as tyranny, poor economic opportunities as well as systematic
social deprivation neglect of public facilities as well as intolerance or over activity of
repressive states."
Economic development is not possible without growth but growth is possible without
development because growth is just increase in GNP It does not have any other parameters
to it. Development can be conceived as Multi-Dimensional process or phenomena. If there is
increase in GNP more than the increase in per capita Income then we can say that
Development is possible. When given conditions of population improves then we can say that
this is also an indicator of economic Development.