Definition of the word corporation

«Corp.» redirects here. For a common misspelling of copyright, see Copr.

A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law «born out of statute»; a legal person in legal context) and recognized as such in law for certain purposes.^[1]: 10 Early incorporated entities were established by charter (i.e., by an ad hoc act granted by a monarch or passed by a parliament or legislature). Most jurisdictions now allow the creation of new corporations through registration. Corporations come in many different types but are usually divided by the law of the jurisdiction where they are chartered based on two aspects: by whether they can issue stock, or by whether they are formed to make a profit.^[2] Depending on the number of owners, a corporation can be classified as aggregate (the subject of this article) or sole (a legal entity consisting of a single incorporated office occupied by a single natural person).

One of the most attractive early advantages business corporations offered to their investors, compared to earlier business entities like sole proprietorships and joint partnerships, was limited liability.^{[clarification needed]} Limited liability means that a passive shareholder in a corporation will not be personally liable either for contractually agreed obligations of the corporation, or for torts (involuntary harms) committed by the corporation against a third party. Limited liability in contract is uncontroversial because the parties to the contract could have agreed to it and could agree to waive it by contract. However, limited liability in tort remains controversial because third parties do not agree to waive the right to pursue shareholders. There is significant evidence that limited liability in tort may lead to excessive corporate risk taking and more harm by corporations to third parties.^[3][4]

Where local law distinguishes corporations by their ability to issue stock, corporations allowed to do so are referred to as stock corporations; one type of investment in the corporation is through stock, and owners of stock are referred to as stockholders or shareholders. Corporations not allowed to issue stock are referred to as non-stock corporations; i.e. those who are considered the owners of a non-stock corporation are persons (or other entities) who have obtained membership in the corporation and are referred to as a member of the corporation. Corporations chartered in regions where they are distinguished by whether they are allowed to be for-profit are referred to as for-profit and not-for-profit corporations, respectively.

There is some overlap between stock/non-stock and for-profit/not-for-profit in that not-for-profit corporations are nearly always non-stock as well. A for-profit corporation is almost always a stock corporation, but some for-profit corporations may choose to be non-stock. To simplify the explanation, whenever «stockholder» or «shareholder» is used in the rest of this article to refer to a stock corporation, it is presumed to mean the same as «member» for a non-profit corporation or for a profit, non-stock corporation. Registered corporations have legal personality recognized by local authorities and their shares are owned by shareholders^[5][6] whose liability is generally limited to their investment.

Shareholders do not typically actively manage a corporation; shareholders instead elect or appoint a board of directors to control the corporation in a fiduciary capacity. In most circumstances, a shareholder may also serve as a director or officer of a corporation. Countries with co-determination employ the practice of workers of an enterprise having the right to vote for representatives on the board of directors in a company.

In American English, the word corporation is most often used to describe large business corporations.^[7] In British English and in the Commonwealth countries, the term company is more widely used to describe the same sort of entity while the word corporation encompasses all incorporated entities. In American English, the word company can include entities such as partnerships that would not be referred to as companies in British English as they are not a separate legal entity. Late in the 19th century, a new form of the company having the limited liability protections of a corporation, and the more favorable tax treatment of either a sole proprietorship or partnership was developed. While not a corporation, this new type of entity became very attractive as an alternative for corporations not needing to issue stock. In Germany, the organization was referred to as Gesellschaft mit beschränkter Haftung or GmbH. In the last quarter of the 20th century, this new form of non-corporate organization became available in the United States and other countries, and was known as the limited liability company or LLC. Since the GmbH and LLC forms of organization are technically not corporations (even though they have many of the same features), they will not be discussed in this article.

History[edit]

The word «corporation» derives from corpus, the Latin word for body, or a «body of people». By the time of Justinian (reigned 527–565), Roman law recognized a range of corporate entities under the names Universitas, corpus or collegium. Following the passage of the Lex Julia during the reign of Julius Caesar as Consul and Dictator of the Roman Republic (49–44 BC), and their reaffirmation during the reign of Caesar Augustus as Princeps senatus and Imperator of the Roman Army (27 BC–14 AD), collegia required the approval of the Roman Senate or the Emperor in order to be authorized as legal bodies.^[8] These included the state itself (the Populus Romanus), municipalities, and such private associations as sponsors of a religious cult, burial clubs, political groups, and guilds of craftsmen or traders. Such bodies commonly had the right to own property and make contracts, to receive gifts and legacies, to sue and be sued, and, in general, to perform legal acts through representatives.^[9] Private associations were granted designated privileges and liberties by the emperor.^[10]

The concept of the corporation was revived in the Middle Ages with the recovery and annotation of Justinian’s Corpus Juris Civilis by the glossators and their successors the commentators in the 11th–14th centuries. Particularly important in this respect were the Italian jurists Bartolus de Saxoferrato and Baldus de Ubaldis, the latter of whom connected the corporation to the metaphor of the body politic to describe the state.^[11][12]

Early entities which carried on business and were the subjects of legal rights included the collegium of ancient Rome and the sreni of the Maurya Empire in ancient India.^[13] In medieval Europe, churches became incorporated, as did local governments, such as 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.

In medieval times, traders would do business through common law constructs, such as partnerships. Whenever people acted together with a view to profit, the law deemed that a partnership arose. Early guilds and livery companies were also often involved in the regulation of competition between traders.

Mercantilism[edit]

Dutch and English chartered companies, such as the Dutch East India Company (VOC) and the Hudson’s Bay Company, were created to lead the colonial ventures of European nations in the 17th century. Acting under a charter sanctioned by the Dutch government, the Dutch East India Company 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 were also explicitly granted limited liability in the company’s royal charter.^[14]

In England, the government created corporations under a royal charter or an Act of Parliament with the grant of a monopoly over a specified territory. The best-known example, established in 1600, was the East India Company of London. Queen Elizabeth I granted it the exclusive right to trade with all countries to the east of the Cape of Good Hope. Some corporations at this time would act on the government’s behalf, bringing in revenue from its exploits abroad. Subsequently, the company became increasingly integrated with English and later British military and colonial policy, just as most corporations were essentially dependent on the Royal Navy’s ability to control trade routes.

Labeled by both contemporaries and historians as «the grandest society of merchants in the universe», the English 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 exploitative.^[15] On 31 December 1600, Queen Elizabeth I granted the company a 15-year monopoly on trade to and from the East Indies and Africa.^[16] By 1711, shareholders in the East India Company were earning a return on their investment of almost 150 per cent. Subsequent stock offerings demonstrated just how lucrative the company had become. Its first stock offering in 1713–1716 raised £418,000, its second in 1717–1722 raised £1.6 million.^[17]

A similar chartered company, the South Sea Company, was established in 1711 to trade in the Spanish South American colonies, but met with less success. The South Sea Company’s monopoly rights were supposedly backed by the Treaty of Utrecht, signed in 1713 as a settlement following the War of the Spanish Succession, which gave Great Britain an asiento to trade in the region for thirty years. In fact, the Spanish remained hostile and let only one ship a year enter. Unaware of the problems, investors in Britain, enticed by extravagant promises of profit from company promoters bought thousands of shares. By 1717, the South Sea Company was so wealthy (still having done no real business) that it assumed the public debt of the British government. This accelerated the inflation of the share price further, as did the Bubble Act 1720, which (possibly with the motive of protecting the South Sea Company from competition) prohibited the establishment of any companies without a royal charter. The share price rose so rapidly that people began buying shares merely in order to sell them at a higher price, which in turn led to higher share prices. This was the first speculative bubble the country had seen, but by the end of 1720, the bubble had «burst», and the share price sank from £1,000 to under £100. As bankruptcies and recriminations ricocheted through government and high society, the mood against corporations and errant directors was bitter.

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 the 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.

— A Treatise on the Law of Corporations, Stewart Kyd (1793–1794)

Development of modern company law[edit]

Due to the late 18th century abandonment of mercantilist economic theory and the rise of classical liberalism and laissez-faire economic theory due to a revolution in economics led by Adam Smith and other economists, corporations transitioned from being government or guild affiliated entities to being public and private economic entities free of governmental directions.^[18] Smith wrote in his 1776 work The Wealth of Nations that mass corporate activity could not match private entrepreneurship, because people in charge of others’ money would not exercise as much care as they would with their own.^[19]

Deregulation[edit]

The British Bubble Act 1720s prohibition on establishing companies remained in force until its repeal in 1825. By this point, the Industrial Revolution had gathered pace, pressing for legal change to facilitate business activity.^[20] The repeal was the beginning of a gradual lifting on restrictions, though business ventures (such as those chronicled by Charles Dickens in Martin Chuzzlewit) under primitive companies legislation were often scams. Without cohesive regulation, proverbial operations like the «Anglo-Bengalee Disinterested Loan and Life Assurance Company» were undercapitalized ventures promising no hope of success except for richly paid promoters.^[21]

The process of incorporation was possible only through a royal charter or a private act and was limited, owing to Parliament’s jealous protection of the privileges and advantages thereby granted. As a result, many businesses came to be operated as unincorporated associations with possibly thousands of members. Any consequent litigation had to be carried out in the joint names of all the members and was almost impossibly cumbersome. Though Parliament would sometimes grant a private act to allow an individual to represent the whole in legal proceedings, this was a narrow and necessarily costly expedient, allowed only to established companies.

Then, in 1843, William Gladstone became the chairman of a Parliamentary Committee on Joint Stock Companies, which led to the Joint Stock Companies Act 1844, regarded as the first modern piece of company law.^[22] The Act created the Registrar of Joint Stock Companies, empowered to register companies by a two-stage process. The first, provisional, stage cost £5 and did not confer corporate status, which arose after completing the second stage for another £5. For the first time in history, it was possible for ordinary people through a simple registration procedure to incorporate.^[23] The advantage of establishing a company as a separate legal person was mainly administrative, as a unified entity under which the rights and duties of all investors and managers could be channeled.

Limited liability[edit]

However, there was still no limited liability and company members could still be held responsible for unlimited losses by the company.^[24] The next, crucial development, then, was the Limited Liability Act 1855, passed at the behest of the then Vice President of the Board of Trade, Robert Lowe. This allowed investors to limit their liability in the event of business failure to the amount they invested in the company – shareholders were still liable directly to creditors, but just for the unpaid portion of their shares. (The principle that shareholders are liable to the corporation had been introduced in the Joint Stock Companies Act 1844).

The 1855 Act allowed limited liability to companies of more than 25 members (shareholders). Insurance companies were excluded from the act, though it was standard practice for insurance contracts to exclude action against individual members. Limited liability for insurance companies was allowed by the Companies Act 1862.

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.»^[25] The major error of this judgment was recognised by the same magazine more than 70 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 trade corporations, a place of honour with Watt and Stephenson, and other pioneers of the Industrial Revolution. «^[26]

These two features – a simple registration procedure and limited liability – were subsequently codified into the landmark 1856 Joint Stock Companies Act. This was subsequently consolidated with a number of other statutes in the Companies Act 1862, which remained in force for the rest of the century, up to and including the time of the decision in Salomon v A Salomon & Co Ltd.^[27]

The legislation shortly gave way to a railway boom, and from then, the numbers of companies formed soared. In the later nineteenth century, depression took hold, and just as company numbers had boomed, many began to implode and fall into insolvency. Much strong academic, legislative and judicial opinion was opposed to the notion that businessmen could escape accountability for their role in the failing businesses.

Further developments[edit]

In 1892, Germany introduced the Gesellschaft mit beschränkter Haftung with a separate legal personality and limited liability even if all the shares of the company were held by only one person. This inspired other countries to introduce corporations of this kind.

The last significant development in the history of companies was the 1897 decision of the House of Lords in Salomon v. Salomon & Co. where the House of Lords confirmed the separate legal personality of the company, and that the liabilities of the company were separate and distinct from those of its owners.

In the United States, forming a corporation usually required an act of legislation until the late 19th century. Many private firms, such as Carnegie’s steel company and Rockefeller’s Standard Oil, avoided the corporate model for this reason (as a trust). State governments began to adopt more permissive corporate laws from the early 19th century, although these were all restrictive in design, often with the intention of preventing corporations from gaining too much wealth and power.^[28]

New Jersey was the first state to adopt an «enabling» corporate law, with the goal of attracting more business to the state,^[29] in 1896. In 1899, Delaware followed New Jersey’s lead with the enactment of an enabling corporate statute, but Delaware only became the leading corporate state after the enabling provisions of the 1896 New Jersey corporate law were repealed in 1913.^[28]

The end of the 19th century saw the emergence of holding companies and corporate mergers creating larger corporations with dispersed shareholders. Countries began enacting antitrust laws to prevent anti-competitive practices and corporations were granted more legal rights and protections.
The 20th century saw a proliferation of laws allowing for the creation of corporations by registration across the world, which helped to drive economic booms in many countries before and after World War I. Another major post World War I shift was toward the development of conglomerates, in which large corporations purchased smaller corporations to expand their industrial base.

Starting in the 1980s, many countries with large state-owned corporations moved toward privatization, the selling of publicly owned (or ‘nationalised’) services and enterprises to corporations. Deregulation (reducing the regulation of corporate activity) often accompanied privatization as part of a laissez-faire policy.

Ownership and control[edit]

A corporation is, at least in theory, owned and controlled by its members. In a joint-stock company the members are known as shareholders, and each of their shares in the ownership, control, and profits of the corporation is determined by the portion of shares in the company that they own. Thus a person who owns a quarter of the shares of a joint-stock 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 as dividends) and has a quarter of the votes capable of being cast at general meetings.

In another kind of corporation, the legal document which established the corporation or which contains its current rules will determine the requirements for membership in the corporation. What these requirements are depends on the kind of corporation involved. In a worker cooperative, the members are people who work for the cooperative. In a credit union, the members are people who have accounts with the credit union.^[30]

The day-to-day activities of a corporation are typically controlled by individuals appointed by the members. In some cases, this will be a single individual but more commonly corporations are controlled by a committee or by committees. Broadly speaking, there are two kinds of committee structure.

• A single committee known as a board of directors is the method favored in most common law countries. Under this model, the board of directors is composed of both executive and non-executive directors, the latter being meant to supervise the former’s management of the company.
• A two-tiered committee structure with a supervisory board and a managing board is common in civil law countries.^[31]

In countries with co-determination (such as in Germany), workers elect a fixed fraction of the corporation’s board.

Formation[edit]

Historically, corporations were created by a charter granted by the 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 representatives of the corporation.^{[citation needed]}

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.

In theory, a corporation can not own its own stock. An exception is treasury stock, where the company essentially buys back stock from its shareholders, which reduces its outstanding shares. This essentially becomes the equivalent of unissued capital, where it is not classified as an asset on the balance sheet (passive capital).

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.^{[citation needed]}

Naming[edit]

Corporations generally have a distinct name. Historically, some corporations were 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 governing boards of Harvard University, but it is also the exact name under which Harvard was legally incorporated.^[32] Nowadays, corporations in most jurisdictions may have a distinct name that does not need to make reference to the members of their boards. In Canada, this possibility is taken to its logical extreme: many smaller Canadian corporations have no names at all, merely numbers based on a registration number (for example, «12345678 Ontario Limited»), which is assigned by the provincial or territorial government where the corporation incorporates.

In most countries, corporate names include a term or an abbreviation that denotes the corporate status of the entity (for example, «Incorporated» or «Inc.» in the United States) or the limited liability of its members (for example, «Limited», «Ltd.», or «LLC»).^[33] These terms vary by jurisdiction and language. In some jurisdictions, they are mandatory, and in others, such as California, they are not.^[34] Their use puts everybody on constructive notice that they are dealing with an entity whose liability is limited: one can only collect from whatever assets the entity still controls when one obtains a judgment against it.

Some 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 some other form of collective ownership (in the United States it can be used by a sole proprietorship but this is not generally the case elsewhere).^{[citation needed]}

Personhood[edit]

Despite not being human beings, corporations have been ruled legal persons in a few countries, and have many of the same rights as natural persons do. For example, a corporation can own property, and can sue or be sued for as long as it exists. Corporations can exercise human rights against real individuals and the state,^[35][36] and they can themselves be responsible for human rights violations.^[37] Corporations can be «dissolved» either by statutory operation, the order of the court, or voluntary action on the part of shareholders. Insolvency may result in a form of corporate failure, when creditors force the liquidation and dissolution of the corporation under court order,^[38] but it most often results in a restructuring of corporate holdings. Corporations can even be convicted of special criminal offenses in the UK, such as fraud and corporate manslaughter. However, corporations are not considered living entities in the way that humans are.^[39]

Legal scholars and others, such as Joel Bakan, have observed that a business corporation created as a «legal person» has a psychopathic personality because it is required to elevate its own interests above those of others even when this inflicts major risks and grave harms on the public or on other third-parties. Such critics note that the legal mandate of the corporation to focus exclusively on corporate profits and self interest often victimizes employees, customers, the public at large, and/or the natural resources.^[40] The political theorist David Runciman notes that corporate personhood forms a fundamental part of the modern^[when?] history of the idea of the state, and believes the idea of the corporation as legal person can help to clarify the role of citizens as political stakeholders, and to break down the sharp conceptual dichotomy between the state and the people or the individual, a distinction that, on his account, is «increasingly unable to meet the demands placed on the state in the modern world».^[41]

See also[edit]

Notes[edit]

Further reading[edit]

• Barnet, Richard; Muller, Ronald E. (1974). Global Reach: The Power of the Multinational Corporation. New York: Simon & Schuster.
• Bakan, Joel. The New Corporation: How «Good» Corporations Are Bad for Democracy. (2020)
• Blackstone, W. Commentaries on the Laws of England (1765) 455–473
• Blumberg, Phillip I., The Multinational Challenge to Corporation Law: The Search for a New Corporate Personality, (1993)
• Blumberg, PI, The Multinational Challenge to Corporation Law (1993)
• Bromberg, Alan R. Crane and Bromberg on Partnership. 1968.
• Brown, Bruce. The History of the Corporation (2003)
• Cadman, John William. The Corporation in New Jersey: Business and Politics (1949)
• Conard, Alfred F. Corporations in Perspective. 1976.
• Cooke, C.A., Corporation, Trust and Company: A Legal History, (1950)
• Davies, PL, and LCB Gower, Principles of Modern Company Law (6th ed., Sweet and Maxwell, 1997), chapters 2–4
• Davis, John P. Corporations (1904)
• Davis, Joseph S. Essays in the Earlier History of American Corporations (1917)
• Dignam, Alan and John Lowry (2020), Company Law, Oxford University Press ISBN 978-0-19-928936-3
• Dodd, Edwin Merrick. American Business Corporations Until 1860, with Special Reference to Massachusetts (1954)
• DuBois, A. B. The English Business Company after the Bubble Act (1938)
• Formoy, RR, The Historical Foundations of Company Law (Sweet and Maxwell 1923) 21
• Freedman, Charles. Joint-stock Enterprise in France: From Privileged Company to Modern Corporation (1979)
• Frentrop, P, A History of Corporate Governance 1602–2002 (Brussels et al., 2003)
• Freund, Ernst. The Legal Nature of the Corporation (1897), MCMaster.ca
• Hallis, Frederick. Corporate Personality: A Study in Jurisprudence (1930)
• Hessen, Robert. In Defense of the Corporation. Hoover Institute. 1979.
• Hunt, Bishop. The Development of the Business Corporation in England (1936)
• Klein and Coffee. Business Organization and Finance: Legal and Economic Principles. Foundation. 2002.
• Kocaoglu, Kagan (Cahn Kojaolu) A Comparative Bibliography: Regulatory Competition on Corporate Law
• Kyd, S, A Treatise on the Law of Corporations (1793–1794)
• Mahoney, PG, «Contract or Concession? An Essay on the History of Corporate Law» (2000) 34 Ga. Law Review 873
• Majumdar, Ramesh Chandra. Corporate Life in Ancient India, (1920)
• Means, Robert Charles. Underdevelopment and the Development of Law: Corporations and Corporation Law in Nineteenth-century Colombia, (1980)
• Micklethwait, John and Wooldridge, Adrian. The Company: A Short History of a Revolutionary Idea. New York: Modern Library. 2003.
• Owen, Thomas. The Corporation Under Russian Law: A Study in Tsarist Economic Policy (1991)
• Rungta, Radhe Shyam. The Rise of the Business Corporation in India, 1851–1900 (1970)
• Scott, W. R. Constitution and Finance of English, Scottish and Irish Joint-Stock Companies to 1720 (1912)
• Sobel, Robert. The Age of Giant Corporations: A Microeconomic History of American Business. (1984)
• Tooze, Adam, «Democracy and Its Discontents», The New York Review of Books, vol. LXVI, no. 10 (6 June 2019), pp. 52–53, 56–57. «Democracy has no clear answer for the mindless operation of bureaucratic and technological power. We may indeed be witnessing its extension in the form of artificial intelligence and robotics. Likewise, after decades of dire warning, the environmental problem remains fundamentally unaddressed…. Bureaucratic overreach and environmental catastrophe are precisely the kinds of slow-moving existential challenges that democracies deal with very badly…. Finally, there is the threat du jour: corporations and the technologies they promote.» (pp. 56–57.)

External links[edit]

• US Corporate Law at Wikibooks
• an Audio from a talk about the history of corporations and the English Law by Barrister Daniel Bennett

What Is a Corporation?

A corporation is a legal entity that is separate and distinct from its owners. Under the law, corporations possess many of the same rights and responsibilities as individuals. They can enter contracts, loan and borrow money, sue and be sued, hire employees, own assets, and pay taxes.

Some refer to a corporation as a «legal person.»

Understanding Corporations

Almost all large businesses are corporations, including Microsoft Corp., the Coca-Cola Co., and Toyota Motor Corp. Some corporations do business under their names and also under separate business names, such as Alphabet Inc., which famously does business as Google.

The precise legal definition of a corporation differs from jurisdiction to jurisdiction, but the corporation’s most important characteristic is always limited liability. This means that shareholders may take part in the profits through dividends and stock appreciation but are not personally liable for the company’s debts.

The Creation of a Corporation

A corporation is created when it is incorporated by a group of shareholders who share ownership of the corporation, represented by their holding of stock shares, and pursue a common goal.

The vast majority of corporations have a goal of returning a profit for their shareholders. However, some corporations, such as charities or fraternal organizations, are nonprofit or not-for-profit.

In any case, their shareholders, as owners of the corporation, do not accept responsibility for it beyond the potential loss of their investment in it.

A private or «closed corporation» may have a single shareholder or several. Publicly-traded corporations have thousands of shareholders.

In the U.S., corporations are created under the laws of the individual states and are regulated by state laws. Public corporations are regulated by federal law, primarily via the Securities and Exchange Commission.

Becoming a Corporation

Each state has its own laws regarding incorporation.

Most states require the owners to file articles of incorporation with the state and then issue stock to the company’s shareholders. The shareholders are required to elect the board of directors in an annual meeting.

The process of turning a private corporation into a public corporation is far more complex, as it falls under federal laws requiring full and public disclosure of financial information to potential shareholders and to the government.

The Day-to-Day Operations of a Corporation

The shareholders of a corporation typically receive one vote per share.

They hold an annual meeting during which they elect a board of directors. The board hires and oversees the senior management that is responsible for the corporation’s day-to-day activities.

The board of directors executes the corporation’s business plan. Although the members of the board are not personally responsible for the corporation’s debts, they owe a duty of care to the corporation and can incur personal liabilities if they neglect this duty.

Some tax statutes also provide for the personal liabilities of the board of directors.

Liquidating a Corporation

The legal existence of a corporation can be ended using the process called liquidation. This may be a voluntary decision to cease operations or may be forced by the financial collapse of the business.

Essentially, a company appoints a liquidator who sells the corporation’s assets. The company pays any creditors and distributes any remaining money to the shareholders.

An involuntary liquidation is usually triggered by the creditors of a corporation that has failed to pay its bills. If the situation cannot be resolved, it is followed by a filing for bankruptcy.

Word	CORPORATION
Character	11
Hyphenation	cor po ra tion
Pronunciations	N/A

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What do we mean by corporation?

An entity such as a business, municipality, or organization, that involves more than one person but that has met the legal requirements to operate as a single person, so that it may enter into contracts and engage in transactions under its own identity. noun

Such a body created for purposes of government. noun

A group of people combined into or acting as one body. noun

A protruding abdominal region; a potbelly. noun

An artificial person, created by law, or under authority of law, from a group or succession of natural persons, and having a continuous existence irrespective of that of its members, and powers and liabilities different from those of its members. noun

The body, generally large, of a man or an animal. noun

A body politic or corporate, formed and authorized by law to act as a single person, and endowed by law with the capacity of succession; a society having the capacity of transacting business as an individual. noun

See under Close. noun

A group of individuals, created by law or under authority of law, having a continuous existence independent of the existences of its members, and powers and liabilities distinct from those of its members. noun

In Fascist Italy, a joint association of employers’ and workers’ representatives. noun

A protruding belly; a paunch. noun

A business firm whose articles of incorporation have been approved in some state noun

Slang for a paunch noun

A body corporate, created by law or under authority of law, having a continuous existence independent of the existences of its members, and powers and liabilities distinct from those of its members.

The municipal governing body of a borough or city.

In Fascist Italy, a joint association of employers’ and workers’ representatives.

A protruding belly; a paunch.

1. Your business becomes successful to the point where you decide that you no longer want to take responsibility of it, however you decide to keep your status by renaming your position as CEO, CFO, etc. so that you can determine your own ridiculous salary and sell your stocks to «shareholders» who then take responsibility of your business. Furthermore, if your company is a bank you can then purposely go bankrupt so that the government can bail you out to give yourself a bonus in addition to your ridiculous salary because the taxpayers will pay it and they don’t have any say-so in the government. You can also donate money without paying taxes to a politician’s shell corporation so that nobody will ever know it was you «on record.» You also (wrongly) assume that the average taxpayer is too stupid to know what’s going on here.
2. An expletive used to describe anything that amounts to investment without return. Urban Dictionary

An entity that remains free to continue to do as it damn well pleases after being convicted of criminal activity that would have been a capital offense if an individual had committed it. Urban Dictionary

A fascist regime that is permitted to exist within a democratic society. Urban Dictionary

The real controllers of the world. and no its not just America.
Money controls everything. take control of a countries economy, u practically are the king. Urban Dictionary

Something that doesn’t really need to be greedy, but in reality, is.
CEOs in America make thousands of times more than their employees. In Britain, they only make about six times as much.
See that CD you just bought for $15? It cost about 1 cent to make it. How much does the artist get? About 50 cents or less per CD. How much goes into the laborers that made the CD? Well, seeing that it was either made by machines or minimum-wage workers (to assemble the case), the electricity/labor cost per CD is probably 5-10 cents. Let’s round up and say it’s a dollar total. So where’s the rest go? Into the corporation.
The Rock Against Bush CD cost $7 (if you buy it directly from the producer). That’s less than half the price of a typical CD. That shows that it is possible to have cheap CDs.
An ideal corporation always puts its employees before its executive office and always puts its consumers before its profit. But of course, none of this happens. We see people get laid off so that the exectuive’s stock can go up a half of a point. We see goods that cost a dollar to make being sold for twenty. We see them exploiting the children of third-world countries.
Don’t give me crap about how they want the job. It’s exploiting, regardless of whether they want it or not. Since when do Americans deserve more rights than Africans or Chinese?
Oh, and corporations basically have the government and media in its pocket. Corporations buy the presidency through donations. Enron donated $114,752 to the Republicans and $102,050 to the Democrats. Then, when they’re elected, the do whatever the corporation wants. Oh, and they control the media too. Microsoft controls NBC, Fox controls Fox news, etc. Liberal media my ass. It’s not a liberal media, it’s not a conservative media. It’s a profiteer media. Meaning, anything that will get them a profit, they will report. Urban Dictionary

Entity that can, and usually does, abuse its employees, investors, and customers. Led by individuals called executives, who care only about playing golf, porking each other’s trophy wives, and lining their own pockets. Urban Dictionary

Total ownage of all there is including your mind and your life.
All your base are belong to us.
And there is nothing you or anyone else can do. Urban Dictionary

1) An Extremely Good, Rock Only Night Club WIth It’s Own Under 18’s Night (Known As Kiddy Corp or K Corp) In Sheffield, England
2} These are legal entities created by the registration of appropriate incorporating documents with the supervising government office. These May be private (ownership sometimes held by specific individuals ,these are not traded on a public stock exchange) or public corporations (shares can be bought by everyday people). The Shareholders are protected from liability for faulty the actions of the corporation. Urban Dictionary

Noun. An ingenious device to aquire personal wealth
without personal responsibility. Urban Dictionary

Corporations in 3rd world countries pay on average 500-800% of the income people are making there. These companies build factories there because they can pay less for labor than they would in America, meaning they in turn can charge lower prices, and sell more. By the same token, the workers who work in them don’t do so to help the company, but because it’s 5-8 times the money they would make at the next best alternative.
Voluntarily entered agreement to mutual benefit…the alternative is to take the Susan Sarandon approach (that is, legislate the jobs there out of existence…»better they starve»). The entire reason a company would go halfway across the world is because it’s cheaper…using government Force to Coerce people into paying American wages will not mean the people there will be making more money…the companies simply won’t build plants there (how could they afford to pay more for wages and for shipping? and why would any person do that?)
Bottom line, companies do not exist to provide jobs and wages. Wal-Mart does not sell bread to me for $X because I want it for that price…they offer it because the $X is more valuable to them than the bread. By the same token, I don’t exist to provide income to Wal-Mart. I don’t shop at Wal-Mart because it needs my money…I buy the bread because I value the bread more than my $X. But at the end of the day, each of us can only OFFER the other our property…neither can coerce the other; we each have the power to refuse the deal and walk away.
The situation is no different in India. A company can show up and build a factory, open the doors, and OFFER to pay people X. If X is worth more than their labor (which it surely will be if it’s 5-8 times more than they’re making now), they may choose to accept the deal. Just as the company has no right to Force people to work for them (or to order them to work under certain conditions), the individuals have no right to Force the company to hire them or employ them under certain conditions.
(As a side note, whenever a company opens a new factory over there, people typically beat down the doors to get such «low paying» jobs…they offer bribes to the employers, offer to pay their first month’s salary in return for securing a job for a family member, etc. What we consider low paying here is actually an opportunity few of them would ever see, as it is more than any other place there pays them.) Urban Dictionary

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A corporation is organized as a system — it has this department, that department, that department… they don’t have any meaning separately; they only can function together. And also the body is a system. Society is a system in some sense. And so on.

David Bohm

PRONUNCIATION OF CORPORATION

GRAMMATICAL CATEGORY OF CORPORATION

Corporation is a noun.

WHAT DOES CORPORATION MEAN IN ENGLISH?

Definition of corporation in the English dictionary

The first definition of corporation in the dictionary is a group of people authorized by law to act as a legal personality and having its own powers, duties, and liabilities. Other definition of corporation is Also called: municipal corporation. the municipal authorities of a city or town. Corporation is also a group of people acting as one body.

WORDS THAT RHYME WITH CORPORATION

SYNONYMS OF «CORPORATION»

The following words have a similar or identical meaning as «corporation» and belong to the same grammatical category.

TRANSLATION OF CORPORATION

Find out the translation of corporation to 25 languages with our English multilingual translator.

TENDENCIES OF USE OF THE TERM «CORPORATION»

The term «corporation» is very widely used and occupies the 1.573 position in our list of most widely used terms in the English dictionary.

Principal search tendencies and common uses of corporation

FREQUENCY OF USE OF THE TERM «CORPORATION» OVER TIME

10 QUOTES WITH «CORPORATION»

Famous quotes and sentences with the word corporation.

10 ENGLISH BOOKS RELATING TO «CORPORATION»

Discover the use of corporation in the following bibliographical selection. Books relating to corporation and brief extracts from same to provide context of its use in English literature.

10 NEWS ITEMS WHICH INCLUDE THE TERM «CORPORATION»

Find out what the national and international press are talking about and how the term corporation is used in the context of the following news items.

REFERENCE

« EDUCALINGO. Corporation [online]. Available <https://educalingo.com/en/dic-en/corporation>. Apr 2023 ».

A corporation is a business entity that is owned by its shareholder(s), who elect a board of directors to oversee the organization’s activities. The corporation is liable for the actions and finances of the business – the shareholders are not. Corporations can be for-profit, as businesses are, or not-for-profit, as charitable organizations typically are.

Types of corporations

There are two major types of corporations as well: Subchapter C corporations, which are larger organizations owned by multiple shareholders, which can also be other businesses, and Subchapter S corporations, which are often (but not always) smaller businesses owned by an individual shareholder.

Pros

Before creating a corporation, consider what you hope to gain from establishing this separate entity. The biggest advantages of having a corporation are:

• As with some other types of businesses, corporations provide liability protection for its owners, who are called shareholders.
• Companies hoping to raise money from investors will have an easier time as a corporation, which can sell ownership shares.
• Corporate profits are taxed, but at a lower rate than the personal income tax rate individuals pay.
• Potential employees may find working for a corporation, with the prospect of ownership benefits, to be more appealing than working for a privately-held company.
• The corporation can offer a medical reimbursement plan, deducting the cost of providing insurance to employees while allowing employees to use the benefit tax-free.

Cons

While corporations can certainly shield owners from liability, the downsides are sizeable and very costly:

• C Corporations are complex and expensive to set up.
• Once established, corporations spend significant sums of money to stay on top of changing business regulations and timely filing of paperwork. They are best for large organizations with many employees.
• Corporations pay federal, state, and sometimes local taxes on profits, unlike LLCs.
• The corporation pays taxes on dividends paid to shareholders, who then pay taxes on that income themselves.

Forming a corporation

Corporations are often formed in the state in which the business operates, but it doesn’t have to be. Some corporations are formed in states thought to be pro-business, such as Delaware or Nevada, although that creates extra paperwork. You then need to register the corporation as a foreign entity in the state in which you are doing business, and pay taxes to that state.

The next step is creating Articles of Incorporation, which are filed with the state in which you have registered the corporation. These include:

• The name and physical address of the business.
• A description of the business and its goods and services.
• The name and address of the registered agent, or the person authorized to receive official notices.
• A count of the number of shares issued and to whom.

And then create by-laws, which are the rules of the corporation. They include, at a minimum:

• How often the board of directors meets, and when.
• Whether the business operates on a calendar or fiscal year.
• How long board members can serve.
• Rules for changing by-laws.

By-laws can be amended as needed once the corporation is formed.

Considerations

If you expect at some point in the near future to take your company public through an initial public offering (IPO), a C corporation may make a lot of sense.

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