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Corporation : legal status | ||
The law typically views a corporation as a fictional person, a legal person, or a moral person (as opposed to a natural person); In common law countries, the classic statement of this principle is found in Lennard's Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705, where Lord Haldane said: "My Lords, 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." The most salient features of incorporation include: Limited LiabilityUnlike in a partnership or sole proprietorship, members of a corporation have "limited" liability for the corporation's debts and obligations: see leading case in common law, Salomon v. Salomon & Co. [1897] AC 22. As a result their potential losses cannot exceed the amount which they contributed to the corporation as dues or paid for shares. The economic rationale for this lies in the fact that it allows anonymous trading in the shares of the corporation by virtue of eliminating the corporation's creditors as a stakeholder in such a transaction. Without limited liability, a creditor would not likely allow any share to be sold to a buyer of at least equivalent creditworthiness as the seller. Limited liability further allows corporations to raise tremendously more funds for enterprises by combining funds from the owners of stock. Limited liability reduces the amount that an investor can lose in a company. This in turn greatly reduces the risk for potential investors and increases both the number of willing investors and the amount they are likely to invest, thus adding liquidity and volume to the stock market. Perpetual LifetimeThe assets and structure of the corporation exist beyond the lifetime of any of its members or agents. This allows for stability and accumulation of capital, which thus becomes available for investment in projects of a larger size and over a longer term than if the corporate assets remained subject to dissolution and distribution. This feature also had great importance in the medieval period, when land donated to the Church (a corporation) would not generate the feudal fees that a lord could claim upon a landholder's death. In this regard, see Statute of Mortmain. It is important to note that the "perpetual lifetime" feature is an indication of the unbounded potential duration of the corporation's existence, and its accumulation of wealth and thus power. (In theory, a corporation can have its charter revoked at any time, putting an end to its existence as a legal entity. However, in practice, dissolution only occurs for corporations that request it or fail to meet annual filing requirements). Copyright 2008 - France BtoB from Wikipédia
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• Corporate Responsibility
• Arbitration clause • Labor unions in the United States • Types of corporations • Investigative due diligence • Derivative suit • Corporate constitution of companies | |
