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A corporation is an organization—usually a group of people or a
company A company, abbreviated as co., is a Legal personality, legal entity representing an association of people, whether Natural person, natural, Legal person, legal or a mixture of both, with a specific objective. Company members share a common pu ...

company
—authorized by the
state State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly magazine published by the U.S. Department of State * The State (newspaper), ''The State'' (newspaper), a daily newspaper in Columbia, South Carolina, Un ...
to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a
legal person In law, a legal person is any person or 'thing' (less ambiguously, any legal entity) that can do the things a human person is usually able to do in law – such as enter into contracts, lawsuit, sue and be sued, ownership, own property, and so o ...
in legal context) and recognized as such in
law Law is a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to form a unified whole. A system, surrounded and influenced by its environment, is described by its bounda ...
for certain purposes. Early incorporated entities were established by
charter A charter is the grant of authority In the fields of sociology Sociology is the study of society, human social behaviour, patterns of social relationships, social interaction, and culture that surrounds everyday life. It is a social scie ...
(i.e. by an ''
ad hoc Ad hoc is a Latin phrase __NOTOC__ This is a list of Wikipedia articles of Latin phrases and their translation into English. To view all phrases on a single, lengthy document, see: * List of Latin phrases (full) The list also is divided alpha ...

ad hoc
'' act granted by a monarch or passed by a parliament or legislature). Most
jurisdiction Jurisdiction (from Latin Latin (, or , ) is a classical language A classical language is a language A language is a structured system of communication Communication (from Latin ''communicare'', meaning "to share" or "to be i ...
s now allow the creation of new corporations through
registration A register is an authoritative list of one kind of information. Register or registration may refer to: Arts entertainment, and media Music * Register (music), the relative "height" or range of a note, melody, part, instrument, etc. * ''Regist ...
. 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 In finance, stock (also capital stock) consists of all of the shares In financial markets A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities i ...
, or by whether they are formed to make a
profit Profit may refer to: Business and law * Profit (accounting) Profit, in accounting Accounting or Accountancy is the measurement, processing, and communication of financial and non financial information about economic entity, economic en ...
. 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 In jurisprudence Jurisprudence, or legal theory, is the theoretical study of the propriety of law Law is a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to form ...
). One of the most attractive early advantages business corporations offered to their investors, compared to earlier business entities like
sole proprietorship A sole proprietorship , also known as a sole tradership, individual entrepreneurship or proprietorship, is a type of enterprise owned and run by one person and in which there is no legal distinction between the owner and the Types of business ent ...
s and joint partnerships, was limited liability. 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
tort A tort, in common law In law, common law (also known as judicial precedent or judge-made law, or ) is the body of law created by judges and similar quasi-judicial by virtue of being stated in written opinions. ' is the most-used legal dict ...

tort
s (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 A waiver is the voluntary wikt:relinquishment, relinquishment or Surrender (law), surrender of some known Rights, right or privilege. Regulatory agencies of state departments or the federal government may issue waivers to exempt companies from c ...
the right to pursue shareholders. There is significant concern that limited liability in tort may lead to excessive corporate risk taking and more harm by corporations to third parties. Where local law distinguishes corporations by their ability to issue
stock In finance, stock (also capital stock) consists of all of the shares In financial markets A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities i ...

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 ''
shareholder A shareholder (in the United States often referred to as stockholder) of a corporation is an individual or legal entity (such as another corporation, a body politic, a Trust law, trust or partnership) that is registered by the corporation as the ...
s''. 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 A nonprofit organization (NPO), also known as a non-business entity, not-for-profit organization, or nonprofit institution, is a legal entity organized and operated for a collective, public or social benefit, in contrast with an entity that op ...
in that not-for-profit corporations are 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 In law Law is a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to form a unified whole. A system, surrounded and influenced by its environment, is described by its b ...
recognized by local authorities and their shares are owned by shareholders 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 A board of directors is a group of people who jointly supervise the activities of an organization An organization, or organisation (Commonwealth English The use of the English language English is a West Germanic languages, W ...
to control the corporation in a
fiduciary A fiduciary is a person who holds a legal Law is a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to form a unified whole. A system, surrounded and influenced by ...
capacity. In most circumstances, a shareholder may also serve as a director or officer of a corporation. Countries with
co-determination In corporate governance Corporate governance is the collection of mechanisms, processes and relations used by various parties to control and to operate a corporation. Governance structures and principles identify the distribution of rights and re ...
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 American English (AmE, AE, AmEng, USEng, en-US), sometimes called United States English or U.S. English, is the set of variety (linguistics), varieties of the English language native to the United States. Currently, American English is the m ...
, the word ''corporation'' is most often used to describe large business corporations. In
British English British English (BrE) is the standard dialect A standard language (also standard variety, standard dialect, and standard) is a language variety that has undergone substantial codification of grammar and usage and is employed by a populatio ...
and in the
Commonwealth countries The Commonwealth of Nations The Commonwealth of Nations, generally known simply as the Commonwealth, is a political association of 54 member states, almost all of which are former territorial evolution of the British Empire, territories of ...
, 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
partnership A partnership is an arrangement where parties, known as business partner A business partner is a commercial entity with which another commercial entity has some form of Business alliance, alliance. This relationship may be a contractual, exclus ...

partnership
s that would not be referred to as companies in British English as they are not a
separate legal entity In the United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country in . It consists of 50 , a , five major , 326 , and some . At , it is the world's . The United Sta ...
. 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 A ''Gesellschaft mit beschränkter Haftung'' (, abbreviated GmbH and also GesmbH in Austria), meaning "company with limited liability", is a type of legal entity In law Law is a system A system is a group of Interaction, interactin ...
'' 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 A limited liability company (LLC) is the US-specific form of a private limited company A private limited company is any type of business entity in Privately held company, "private" ownership used in many jurisdictions, in contrast to a Pu ...
'' 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

The word "corporation" derives from ''corpus'', the
Latin Latin (, or , ) is a classical language belonging to the Italic languages, Italic branch of the Indo-European languages. Latin was originally spoken in the area around Rome, known as Latium. Through the power of the Roman Republic, it became ...

Latin
word for body, or a "body of people". By the time of
Justinian Justinian I (; la, Flavius Petrus Sabbatius Iustinianus; grc-gre, Ἰουστινιανός ; 48214 November 565), also known as Justinian the Great, was the Byzantine emperor This is a list of the Byzantine emperors from the foundation o ...
(reigned 527–565),
Roman law Roman law is the law, legal system of ancient Rome, including the legal developments spanning over a thousand years of jurisprudence, from the Twelve Tables (c. 449 BC), to the ''Corpus Juris Civilis'' (AD 529) ordered by Eastern Roman emperor J ...
recognized a range of corporate entities under the names ''Universitas'', ''corpus'' or ''collegium''. Following the passage of the ''
Lex Julia A ''Lex Julia'' (or: Lex Iulia, plural: Leges Juliae/Leges Iuliae) was an ancient Roman law that was introduced by any member of the Julian family. Most often, "Julian laws", ''Lex Iulia'' or ''Leges Iuliae'' refer to moral legislation introduced ...
'' during the reign of
Julius Caesar Gaius Julius Caesar (; 12 July 100 BC – 15 March 44 BC) was a Roman Roman or Romans most often refers to: *, the capital city of Italy *, Roman civilization from 8th century BC to 5th century AD *, the people of ancient Rome *', shortened ...

Julius Caesar
as
Consul Consul (abbrev. ''cos.''; Latin Latin (, or , ) is a classical language belonging to the Italic branch of the Indo-European languages. Latin was originally spoken in the area around Rome, known as Latium. Through the power of the Roman ...
and
Dictator A dictator is a political leader who possesses absolute power. A dictatorship A dictatorship is a form of government A government is the system or group of people governing an organized community, generally a state. In the c ...
of the
Roman Republic The Roman Republic ( la, Rēs pūblica Rōmāna ) was a state of the classical Roman civilization, run through public In public relations Public relations (PR) is the practice of managing and disseminating information from an indiv ...
(49–44 BC), and their reaffirmation during the reign of
Caesar Augustus Caesar Augustus (23 September 63 BC19 August AD 14) was the first Roman emperor The Roman emperor was the ruler of the Roman Empire during the imperial period (starting in 27 BC). The emperors used a variety of different titles througho ...

Caesar Augustus
as ''
Princeps senatus The ''princeps senatus'' (plural ''principes senatus'') was the first member by precedence of the Roman Senate. Although officially out of the ''cursus honorum The ''cursus honorum'' (; , or more colloquially 'ladder of offices') was the sequ ...
'' and
Imperator The Latin Latin (, or , ) is a classical language A classical language is a language A language is a structured system of communication Communication (from Latin ''communicare'', meaning "to share" or "to be in relation with" ...

Imperator
of the
Roman Army The Roman army (Latin Latin (, or , ) is a classical language A classical language is a language A language is a structured system of communication Communication (from Latin ''communicare'', meaning "to share" or "to be in ...

Roman Army
(27 BC–14 AD), ''collegia'' required the approval of the
Roman Senate
Roman Senate
or the
Emperor An emperor (from la, imperator The Latin word "imperator" derives from the stem of the verb la, imperare, label=none, meaning 'to order, to command'. It was originally employed as a title roughly equivalent to ''commander'' under the Roma ...
in order to be authorized as legal bodies. 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. Private associations were granted designated privileges and liberties by the emperor. The concept of the corporation was revived in the
Middle Ages In the history of Europe The history of Europe concerns itself with the discovery and collection, the study, organization and presentation and the interpretation of past events and affairs of the people of Europe since the beginning of ...
with the recovery and annotation of Justinian's ''
Corpus Juris Civilis The ''Corpus Juris'' (or ''Iuris'') ''Civilis'' ("Body of Civil Law") is the modern name for a collection of fundamental works in jurisprudence Jurisprudence, or legal theory, is the theoretical study of the propriety of . Scholars of ...
'' by the
glossator The scholars of the 11th- and 12th-century legal schools in Italy Italy ( it, Italia ), officially the Italian Republic ( it, Repubblica Italiana, links=no ), is a country consisting of a Northern Italy, continental part, delimited by the Al ...
s and their successors the
commentators Commentator or commentators may refer to: * Commentator (historical) or Postglossator, a member of a European legal school that arose in France in the fourteenth century * Commentator (horse) (foaled 2001), American Thoroughbred racehorse * The Com ...
in the 11th–13th centuries. Particularly important in this respect were the Italian jurists
Bartolus de Saxoferrato Bartolus de Saxoferrato (Italian: ''Bartolo da Sassoferrato''; 131313 July 1357) was an Italian law professor and one of the most prominent continental jurists of Medieval Roman Law. He belonged to the school known as the commentators or postglos ...
and
Baldus de Ubaldis Baldus de Ubaldis (Italian: ''Baldo degli Ubaldi''; 1327 – 28 April 1400) was an Italian jurist, and a leading figure in Medieval Roman Law. Life A member of the noble family of the Ubaldi (Baldeschi), Baldus was born at Perugia P ...

Baldus de Ubaldis
, the latter of whom connected the corporation to the metaphor of the
body politic The body politic is a medieval In the history of Europe The history of Europe concerns itself with the discovery and collection, the study, organization and presentation and the interpretation of past events and affairs of the people ...

body politic
to describe the
state State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly magazine published by the U.S. Department of State * The State (newspaper), ''The State'' (newspaper), a daily newspaper in Columbia, South Carolina, Un ...
. Entities which carried on business and were the subjects of legal rights were found in
ancient Rome In historiography Historiography is the study of the methods of historian ( 484– 425 BC) was a Greek historian who lived in the 5th century BC and one of the earliest historians whose work survives. A historian is a person who stud ...
, and the
Maurya Empire The Maurya Empire was a geographically extensive Iron Age The Iron Age is the final epoch of the three-age division of the prehistory Prehistory, also known as pre-literary history, is the period of human history Human h ...
in ancient India. In medieval Europe, churches became incorporated, as did local governments, such as the
City of London Corporation The City of London Corporation, officially and legally the Mayor and Commonalty and Citizens of the City of London, is the municipal governing body of the City of London, the historic centre of London and the location of much of the United Kingd ...
. 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 Falun () is a city A city is a large human settlement.Goodall, B. (1987) ''The Penguin Dictionary of Human Geography''. London: Penguin.Kuper, A. and Kuper, J., eds (1996) ''The Social Science Encyclopedia''. 2nd edition. London: Routledge. It c ...

Falun
,
Sweden Sweden ( sv, Sverige ), officially the Kingdom of Sweden ( sv, links=no, Konungariket Sverige ), is a Nordic country The Nordic countries, or the Nordics, are a geographical and cultural region In geography, regions are areas that ...

Sweden
, obtained a
charter A charter is the grant of authority In the fields of sociology Sociology is the study of society, human social behaviour, patterns of social relationships, social interaction, and culture that surrounds everyday life. It is a social scie ...
from King Magnus Eriksson in 1347. In
medieval times Medieval Times Dinner and Tournament is a family dinner theater featuring staged medieval In the history of Europe The history of Europe concerns itself with the discovery and collection, the study, organization and presentation an ...
, traders would do business through
common law In law, common law (also known as judicial precedent or judge-made law, or case law Case law is the collection of past legal decisions written by courts and similar tribunal A tribunal, generally, is any person or institution with authority ...
constructs, such as
partnership A partnership is an arrangement where parties, known as business partner A business partner is a commercial entity with which another commercial entity has some form of Business alliance, alliance. This relationship may be a contractual, exclus ...

partnership
s. Whenever people acted together with a view to profit, the law deemed that a partnership arose. Early
guild A guild is an association of artisan Wood carver in Bali An artisan (from french: artisan, it, artigiano) is a skilled craft worker who makes or creates material objects partly or entirely by hand. These objects may be functiona ...
s and
livery companies Coat of arms of the Worshipful Company of Grocers, founded in 1345, 2nd in precedence amongst the livery companies of the city: ''Argent, a chevron gules between nine cloves six in chief and three in base proper'' There are 110 livery companie ...
were also often involved in the regulation of competition between traders.


Mercantilism

Dutch and English chartered companies, such as the
Dutch East India Company The Dutch East India Company, officially the United East India Company ( nl, Vereenigde Oost Indische Compagnie; VOC), was a multinational corporation A multinational company (MNC) is a corporate A corporation is an organization—u ...

Dutch East India Company
(VOC) and the
Hudson's Bay Company The Hudson's Bay Company (HBC; french: Compagnie de la Baie d'Hudson) is a Canadian, now American-owned, retail Retail is the sale of goods In economics Economics () is the social science that studies how people interact with va ...
, 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 Portuguese may refer to: * anything of, from, or related to the country and nation of Portugal ** Portuguese cuisine, traditional foods ** Portuguese language, a Romance language *** Portuguese dialects, variants of the Portuguese language ** Portug ...

Portuguese
forces and established itself in the
Moluccan Islands The Maluku Islands or the Moluccas () (''Molukken'') are an archipelago in eastern Indonesia. Tectonically they are located on the Halmahera Plate within the Molucca Sea Collision Zone. Geographically they are located east of Sulawesi, west of N ...

Moluccan Islands
in order to profit from the
Europe Europe is a continent A continent is any of several large landmass A landmass, or land mass, is a large region In geography Geography (from Greek: , ''geographia'', literally "earth description") is a field of scienc ...

Europe
an demand for
spice A spice is a seed A seed is an embryonic ''Embryonic'' is the twelfth studio album by experimental rock band the Flaming Lips released on October 13, 2009, on Warner Bros. Records, Warner Bros. The band's first double album, it was releas ...

spice
s. 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 Euronext Amsterdam is a stock exchange based in Amsterdam, the Netherlands. Formerly known as the Amsterdam Stock Exchange, it merged on 22 September 2000 with the Brussels Stock Exchange and the Paris Stock Exchange to form Euronext. The regi ...
. Shareholders were also explicitly granted
limited liability Limited liability is a legal status where a person's financial liability Liability may refer to: Law * Legal liability, in both civil and criminal law ** Public liability, part of the law of tort which focuses on civil wrongs ** Product liabi ...
in the company's royal charter. In England, the government created corporations under a
royal charter A royal charter is a formal grant issued by a monarch under royal prerogative The royal prerogative is a body of customary authority, privilege and immunity, recognized in common law In law, common law (also known as judicial precedent or ...

royal charter
or an
Act of Parliament Acts of parliament, sometimes referred to as primary legislation, are texts of law passed by the Legislature, legislative body of a jurisdiction (often a parliament or council). In most countries, acts of parliament begin as a Bill (law), bill, wh ...
with the grant of a
monopoly A monopoly (from Greek el, μόνος, mónos, single, alone, label=none and el, πωλεῖν, pōleîn, to sell, label=none) is as described by Irving Fisher, a market with the "absence of competition", creating a situation where a specific ...

monopoly
over a specified territory. The best-known example, established in 1600, was the
East India Company The East India Company (EIC), also known as the Honourable East India Company (HEIC), East India Trading Company (EITC), the English East India Company or (after 1707) the British East India Company, and informally known as John Company, Com ...
of
London London is the capital Capital most commonly refers to: * Capital letter Letter case (or just case) is the distinction between the letters that are in larger uppercase or capitals (or more formally ''majuscule'') and smaller lowerc ...

London
.
Queen Elizabeth I Elizabeth I (7 September 153324 March 1603) was Queen of England and Ireland Ireland ( ; ga, Éire ; Ulster-Scots: ) is an island upright=1.15, Great_Britain.html"_;"title="Ireland_(left)_and_Great_Britain">Ireland_(left)_an ...

Queen Elizabeth I
granted it the exclusive right to trade with all countries to the east of the
Cape of Good Hope A cape is a sleeveless outer garment, which drapes the wearer's back, arms, and chest, and connects at the neck. History Capes were common in medieval Europe, especially when combined with a Hood (headgear), hood in the Chaperon (headgear), ...

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 The Royal Navy (RN) is the United Kingdom's naval warfare Naval warfare is combat Combat ( French for ''fight'') is a purposeful violent conflict meant to physically harm or kill the opposition. Combat may be armed (using weapon A ...
'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. On 31 December 1600, Queen Elizabeth I granted the company a 15-year monopoly on trade to and from the
East Indies 300px, The East Indies (or simply the Indies), is a term used in historical narratives of the Age of Discovery The Age of Discovery, or the Age of Exploration (sometimes also, particularly regionally, Age of Contact or Contact Period), ...
and
Africa Africa is the world's second-largest and second-most populous continent A continent is any of several large landmass A landmass, or land mass, is a large region In geography Geography (from Greek: , ''geographia'', ...

Africa
. 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. A similar
chartered company A chartered company is an association with investors or shareholder A shareholder (also known as stockholder) is an individual or institution (including a corporation) that legally owns one or more share (finance), shares of the share capital o ...
, the
South Sea Company The South Sea Company (officially The Governor and Company of the merchants of Great Britain, trading to the South Seas and other parts of America, and for the encouragement of the Fishery) was a British joint-stock company A joint-s ...
, 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 The Peace of Utrecht was a series of peace treaties A peace treaty is an agreement between two or more hostile parties, usually countries or government A government is the system or group of people governing an organized commun ...

Treaty of Utrecht
, signed in 1713 as a settlement following the
War of the Spanish Succession The War of the Spanish Succession (1701–1714) was an early-18th-century European war, triggered by the death in November 1700 of the childless Charles II of Spain. It established the principle that dynastic rights were secondary to maintaini ...
, which gave
Great Britain Great Britain is an island An island (or isle) is an isolated piece of habitat that is surrounded by a dramatically different habitat, such as water. Very small islands such as emergent land features on atoll An atoll (), ...

Great Britain
an ''
asiento The ''Asiento de Negros'' was a monopoly contract between the and various merchants for the right to provide . The rarely engaged in the directly from Africa itself, choosing instead to contract out the importation to foreign merchants from ...
'' 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 In public finance, government debt, also known as public interest, public debt, national debt and sovereign debt, is the total amount of debt owed at a point in time by a government or sovereign state to lenders. Government debt can be owed to ...
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 An economic bubble or asset bubble (sometimes also referred to as a speculative bubble, a market bubble, a price bubble, a financial bubble, a speculative mania, or a balloon) is a situation in which asset prices appear to be based on implausible ...
the country had seen, but by the end of 1720, the bubble had "burst", and the share price sank from £1000 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 Stewart Kyd (1759 – 26 January 1811) was a Scottish politician and legal writer. Life A native of Arbroath Arbroath () or Aberbrothock ( gd, Obar Bhrothaig ) is a former royal burgh A royal burgh was a type of Scottish burgh which had ...

Stewart Kyd
, the author of the first treatise on
corporate law Corporate law (also known as business law or enterprise law or sometimes company law) is the body of law Law is a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules t ...
in English, defined a corporation as:


Development of modern company law

Due to the late 18th century abandonment of
mercantilist Mercantilism is an economic policy that is designed to maximize the exports and minimize the imports for an economy. It promotes imperialism, colonialism, tariffs and subsidies on traded goods to achieve that goal. The policy aims to reduce a ...

mercantilist
economic theory and the rise of
classical liberalism Classical liberalism is a political ideology and a History of liberalism, branch of liberalism that advocates free market, civil liberties under the rule of law with an emphasis on limited government, economic freedom, and political freedom. I ...
and
laissez-faire ''Laissez-faire'' ( ; from french: laissez faire , ) is an economic system An economic system, or economic order, is a system of Production (economics), production, allocation of resources, resource allocation and Distribution (economics), d ...
economic theory due to a revolution in
economics Economics () is a social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and interact ...

economics
led by
Adam Smith Adam Smith ( 1723 – 17 July 1790) was a Scottish economist, philosopher as well as a moral philosopher Ethics or moral philosophy is a branch of philosophy that "involves systematizing, defending, and recommending concepts of right and ...

Adam Smith
and other economists, corporations transitioned from being government or
guild A guild is an association of artisan Wood carver in Bali An artisan (from french: artisan, it, artigiano) is a skilled craft worker who makes or creates material objects partly or entirely by hand. These objects may be functiona ...
affiliated entities to being public and private economic entities free of governmental directions. Smith wrote in his 1776 work ''
The Wealth of Nations ''An Inquiry into the Nature and Causes of the Wealth of Nations'', generally referred to by its shortened title ''The Wealth of Nations'', is the ''magnum opus 's ''The Creation of Adam'' (c. 1512), part of the Sistine Chapel ceiling The ...

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.


Deregulation

The British Bubble Act 1720s prohibition on establishing companies remained in force until its repeal in 1825. By this point, the
Industrial Revolution The Industrial Revolution was the transition to new manufacturing processes in Great Britain, continental Europe Continental Europe or mainland Europe is the contiguous continent A continent is any of several large landmasse ...
had gathered pace, pressing for legal change to facilitate business activity. The repeal was the beginning of a gradual lifting on restrictions, though business ventures (such as those chronicled by
Charles Dickens Charles John Huffam Dickens (; 7 February 1812 – 9 June 1870) was an English writer and social critic. He created some of the world's best-known fictional characters and is regarded by many as the greatest novelist of the Victorian e ...

Charles Dickens
in ''
Martin Chuzzlewit ''The Life and Adventures of Martin Chuzzlewit'' (commonly known as ''Martin Chuzzlewit'') is a novel by Charles Dickens Charles John Huffam Dickens (; 7 February 1812 – 9 June 1870) was an English writer and social critic. He ...
'') 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. The process of
incorporation Incorporation may refer to: * Incorporation (business), the creation of a corporation * Incorporation of a place, creation of municipal corporation such as a city or county * Incorporation (academic), awarding a degree based on the student having a ...
was possible only through a
royal charter A royal charter is a formal grant issued by a monarch under royal prerogative The royal prerogative is a body of customary authority, privilege and immunity, recognized in common law In law, common law (also known as judicial precedent or ...

royal charter
or a
private act Proposed bills are often categorized into public bills and private bills. A public bill is a proposed law Law is a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to for ...
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 A lawsuit is a proceeding by a party or parties against another in the civil Civil may refer to: *Civic virtue, or civility *Civil action, or lawsuit *Civil affairs *Civil and political rights *Civil disobedience *Civil engineering *Civil ...
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 William Ewart Gladstone (; 29 December 1809 – 19 May 1898) was a British statesman and Liberal Liberal or liberalism may refer to: Politics *a supporter of liberalism, a political and moral philosophy **Liberalism by country *an a ...

William Gladstone
became the chairman of a Parliamentary Committee on Joint Stock Companies, which led to the
Joint Stock Companies Act 1844The Joint Stock Companies Act 1844 (7 & 8 Vict. ''c.''110) was an Act of the Parliament of the United Kingdom The Parliament of the United Kingdom is the Parliamentary sovereignty in the United Kingdom, supreme Legislature, legislative body of ...
, regarded as the first modern piece of company law. 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. The advantage of establishing a company as a
separate legal person In law Law is a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to form a unified whole. A system, surrounded and influenced by its environment, is described by i ...
was mainly administrative, as a unified entity under which the rights and duties of all investors and managers could be channeled.


Limited liability

However, there was still no limited liability and company members could still be held responsible for unlimited losses by the company. The next, crucial development, then, was the
Limited Liability Act 1855 The Limited Liability Act 1855 (18 & 19 Vict c 133) was an Act of the Parliament of the United Kingdom The Parliament of the United Kingdom is the Parliamentary sovereignty in the United Kingdom, supreme Legislature, legislative body of the ...
, passed at the behest of the then Vice President of the Board of Trade,
Robert Lowe Robert Lowe, 1st Viscount Sherbrooke, , (4 December 1811 – 27 July 1892), British , was a pivotal conservative spokesman who helped shape British politics in the latter half of the 19th century. He held office under as between 1868 and 1873 ...
. This allowed investors to limit their liability in the event of business failure to the amount they invested in the company –
shareholder A shareholder (in the United States often referred to as stockholder) of a corporation is an individual or legal entity (such as another corporation, a body politic, a Trust law, trust or partnership) that is registered by the corporation as the ...
s were still liable directly to
creditor A creditor or lender is a party 300px, '' Hip, Hip, Hurrah!'' (1888) by Peder Severin Krøyer, a painting portraying an artists' party in 19th century Denmark A party is a gathering of people who have been invited by a host A host is ...

creditor
s, but just for the unpaid portion of their
shares In financial markets A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities include stocks and bonds, raw materials and precious metals, which are known ...
. (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 Insurance is a means of protection from financial loss. It is a form of risk management Risk management is the identification, evaluation, and prioritization of risk In simple terms, risk is the possibility of something bad happening. ...

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 1862The Companies Act 1862 (25 & 26 Vict. c.89) was an Act of the Parliament of the United Kingdom The Parliament of the United Kingdom is the Parliamentary sovereignty in the United Kingdom, supreme Legislature, legislative body of the United Kin ...
. This prompted the English periodical ''
The Economist ''The Economist'' is an international weekly newspaper A weekly newspaper is a general-news or current affairsCurrent affairs may refer to: Media * Current Affairs (magazine), ''Current Affairs'' (magazine), a bimonthly magazine of cult ...
'' to write in 1855 that "never, perhaps, was a change so vehemently and generally demanded, of which the importance was so much overrated." The major error of this judgment was recognised by the same magazine more than 70 years later, when it claimed that, " e 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 The watt (symbol: W) is a unit of power Power typically refers to: * Power (physics) In physics, power is the amount of energy transferred or converted per unit time. In the International System of Units, the unit of power is the watt, equa ...

Watt
and
Stephenson Stephenson is a medieval patronymic surname A patronymic surname is a surname originated from the given name of the father or a patrilineal ancestor. Different cultures have different ways of producing patronymic surnames. For example, ear ...

Stephenson
, and other pioneers of the Industrial Revolution. " 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 is a landmark UK company law case. The effect of the House of Lords' unanimous ruling was to uphold firmly the doctrine of corporate personality, as set out in the Companies Act 1862, so that creditors of an insolvent company could not sue the c ...
''. 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

In 1892,
Germany ) , image_map = , map_caption = , map_width = 250px , capital = Berlin Berlin (; ) is the Capital city, capital and List of cities in Germany by population, largest city of Germany by both area and population. Its 3,769,495 inh ...

Germany
introduced the
Gesellschaft mit beschränkter Haftung A ''Gesellschaft mit beschränkter Haftung'' (, abbreviated GmbH and also GesmbH in Austria), meaning "company with limited liability", is a type of legal entity In law Law is a system A system is a group of Interaction, interactin ...
with a separate
legal personality In law Law is a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to form a unified whole. A system, surrounded and influenced by its environment, is described by its b ...
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 The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...

United States
, forming a corporation usually required an act of legislation until the late 19th century. Many private firms, such as
Carnegie
Carnegie
's steel company and
Rockefeller
Rockefeller
's
Standard Oil Standard Oil Co. was an American oil An oil is any nonpolar In chemistry Chemistry is the science, scientific study of the properties and behavior of matter. It is a natural science that covers the Chemical element, elements th ...

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.
New Jersey New Jersey is a U.S. state, state in the Mid-Atlantic States, Mid-Atlantic and Northeastern United States, Northeastern regions of the United States. It is bordered on the north and east by the state of New York (state), New York; on the ea ...
was the first state to adopt an "enabling" corporate law, with the goal of attracting more business to the state, 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. The end of the 19th century saw the emergence of
holding companies A holding company is a company A company, abbreviated as co., is a Legal personality, legal entity representing an association of people, whether Natural person, natural, Legal personality, legal or a mixture of both, with a specific objecti ...
and corporate
mergers In corporate finance Corporate finance is the area of finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money a ...
creating larger corporations with dispersed shareholders. Countries began enacting
antitrust Competition law is a law Law is a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to form a unified whole. A system, surrounded and influenced by its environmen ...
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 Privatization (or privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when a heav ...
, the selling of publicly owned (or 'nationalised') services and enterprises to corporations.
Deregulation Deregulation is the process of removing or reducing state regulations, typically in the economic sphere. It is the repeal of governmental regulation of the economy. It became common in advanced industrial economies in the 1970s and 1980s, as a r ...
(reducing the regulation of corporate activity) often accompanied privatization as part of a laissez-faire policy.


Ownership and control

A corporation is, at least in theory, owned and controlled by its members. In a
joint-stock company A joint-stock company is a business entity In law, a legal person is any person or 'thing' (less ambiguously, any legal entity) that can do the things a human person is usually able to do in law – such as enter into contracts, lawsuit, sue ...
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 A worker cooperative is a cooperative Workers' self-management, owned and self-managed by its workers. This control may mean a firm where every worker-owner participates in decision-making in a democratic fashion, or it may refer to one in which m ...
, the members are people who work for the cooperative. In a
credit union A credit union, a type of financial institution similar to a commercial bank, is a member-owned financial cooperative, controlled by its members and operated on a not-for-profit basis. Credit unions generally provide services to members simila ...
, the members are people who have accounts with the credit union. 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 A board of directors is a group of people who jointly supervise the activities of an organization An organization, or organisation (Commonwealth English The use of the English language English is a West Germanic languages, W ...
is the method favored in most
common law In law, common law (also known as judicial precedent or judge-made law, or case law Case law is the collection of past legal decisions written by courts and similar tribunal A tribunal, generally, is any person or institution with authority ...
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 A supervisory board or supervisory committee, often called '' board of directors'', is a group of individuals chosen by the stockholders of a company A company, abbreviated as co., is a Legal personality, legal entity representing an associa ...
and a is common in
civil law Civil law may refer to: * Civil law (common law) Civil law is a major branch of the law.Glanville Williams. ''Learning the Law''. Eleventh Edition. Stevens. 1982. p. 2. In common law legal systems such as England and Wales and the law of the United ...
countries. In countries with
co-determination In corporate governance Corporate governance is the collection of mechanisms, processes and relations used by various parties to control and to operate a corporation. Governance structures and principles identify the distribution of rights and re ...
(such as
Germany ) , image_map = , map_caption = , map_width = 250px , capital = Berlin Berlin (; ) is the Capital city, capital and List of cities in Germany by population, largest city of Germany by both area and population. Its 3,769,495 inh ...

Germany
and
Sweden Sweden ( sv, Sverige ), officially the Kingdom of Sweden ( sv, links=no, Konungariket Sverige ), is a Nordic country The Nordic countries, or the Nordics, are a geographical and cultural region In geography, regions are areas that ...

Sweden
), workers elect a fixed fraction of the corporation's board.


Formation

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 In United States business law, a registered agent (law), agent (also known as a resident agent, statutory agent, or agent for service of process) is a business or individual designated to receive service of process (SOP) when a business entity ...
(a person or company designated to receive legal service of process). It may also be required to designate an
agent Agent may refer to: Espionage, investigation, and law *, spies or intelligence officers * Law of agency, laws involving a person authorized to act on behalf of another ** Agent of record, a person with a contractual agreement with an insuran ...
or other legal representatives of the corporation. Generally, a corporation files
articles of incorporation Articles of incorporation, also referred to as the certificate of incorporation or the corporate charter, are a document or charter that establishes the existence of a corporation in the United States The United States of America (U.S.A. o ...
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 A by-law (bye-law, by(e)law, by(e) law) is a rule or law Law is a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to form a unified whole. A system, surrounded and in ...
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 Foreign corporation is a term used in the United States The United States of America (USA), commonly known as the United States (U.S. or US), or America, is a country Contiguous United States, primarily located in North America. It consists ...
, and is almost always subject to laws of its host state pertaining to
employment Employment is the relationship between two parties Image:'Hip, Hip, Hurrah! Artist Festival at Skagen', by Peder Severin Krøyer (1888) Demisted with DXO PhotoLab Clearview; cropped away black border edge.jpg, 300px, ''Hip, Hip, Hurrah!'' ...

employment
,
crime In ordinary language, a crime is an unlawful act punishable by a state State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly magazine published by the U.S. Department of State * The State (newspaper ...

crime
s,
contract A contract is a legally binding agreement that defines and governs the rights and duties between or among its parties Image:'Hip, Hip, Hurrah! Artist Festival at Skagen', by Peder Severin Krøyer (1888) Demisted with DXO PhotoLab Clearview ...

contract
s, civil actions, and the like.


Naming

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 The President and Fellows of Harvard College (also called the Harvard Corporation or just the Corporation) is the smaller and more powerful of Harvard University Harvard University is a private Private or privates may refer to: Music * "In ...
" is the name of one of the two governing boards of
Harvard University Harvard University is a private Private or privates may refer to: Music * "In Private "In Private" was the third single in a row to be a charting success for United Kingdom, British singer Dusty Springfield, after an absence of nearly t ...

Harvard University
, but it is also the exact name under which Harvard was legally incorporated. 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" or "Ltd."). These terms vary by jurisdiction and language. In some jurisdictions, they are mandatory, and in others, such as California, they are not. Their use puts everybody on
constructive notice Constructive notice is the legal fiction A legal fiction is a fact A fact is something that is true True most commonly refers to truth Truth is the property of being in accord with fact or reality.Merriam-Webster's Online Dictionar ...
that they are dealing with an entity whose
liability Liability may refer to: Law * Legal liability, in both civil and criminal law ** Public liability, part of the law of tort which focuses on civil wrongs ** Product liability, the area of law in which manufacturers, distributors, suppliers, retai ...
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 A company, abbreviated as co., is a Legal personality, legal entity representing an association of people, whether Natural person, natural, Legal person, legal or a mixture of both, with a specific objective. Company members share a common pu ...

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 A sole proprietorship , also known as a sole tradership, individual entrepreneurship or proprietorship, is a type of enterprise owned and run by one person and in which there is no legal distinction between the owner and the Types of business ent ...
but this is not generally the case elsewhere).


Personhood

Despite not being individual human beings, corporations are
legal persons In law, a legal person is any person or 'thing' (less ambiguously, any legal entity) that can do the things a human person is usually able to do in law – such as enter into contracts, Lawsuit, sue and be sued, Ownership, own property, and so on ...
, and have many of the same rights and responsibilities as
natural person In jurisprudence Jurisprudence, or legal theory, is the theoretical study of the propriety of law Law is a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to form ...
s do. For example, a corporation can own property, and can sue or be sued. Corporations can exercise
human rights Human rights are moral A moral (from Latin Latin (, or , ) is a classical language belonging to the Italic languages, Italic branch of the Indo-European languages. Latin was originally spoken in the area around Rome, known as Latium. ...
against real individuals and the state, and they can themselves be responsible for human rights violations. Corporations can be "dissolved" either by statutory operation, the order of the court, or voluntary action on the part of shareholders.
Insolvency In accounting Accounting or Accountancy is the measurement, processing, and communication of financial and non financial information about economic entity, economic entities such as businesses and corporations. Accounting, which has been call ...
may result in a form of corporate failure, when creditors force the liquidation and dissolution of the corporation under court order, but it most often results in a restructuring of corporate holdings. Corporations can even be convicted of criminal offenses, such as
fraud In law Law is a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to form a unified whole. A system, surrounded and influenced by its environment, is described by ...

fraud
and
manslaughter Manslaughter is a common law In law, common law (also known as judicial precedent or judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in written opinions. ''Black ...
. However, corporations are not considered living entities in the way that humans are. Legal scholars, such as
Joel Bakan Joel Conrad Bakan (born 1959) is an American-Canadian writer, jazz musician, filmmaker, and professor at the Peter A. Allard School of Law at the University of British Columbia. Born in Lansing, Michigan, and raised for most of his childhood ...

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 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 , Malaysia Malaysia ( ; ) is a country in Southeast Asia. The federation, federal constitutional monarchy consists of States and federal territories of Malaysia, thirteen states and three federal territories, separated by the South China Se ...
. On the other hand, the political theorist
David Runciman David Walter Runciman, 4th Viscount Runciman of Doxford (born 1 March 1967) is an English academic who teaches politics and history at Cambridge University, where he is Professor of Politics. From October 2014 to October 2018 he was also Head of ...
notes that corporate personhood forms a fundamental part of the modern history of the idea of the
state State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly magazine published by the U.S. Department of State * The State (newspaper), ''The State'' (newspaper), a daily newspaper in Columbia, South Carolina, Un ...
, and the idea of the corporation as legal person can help to clarify the role of citizens as political
stakeholders Stakeholder may refer to: *Stakeholder (corporate), a group, corporate, organization, member, or system that affects or can be affected by an organization's actions *Project stakeholder, a person, group, or organization with an interest in a projec ...
, 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".


See also


Notes


Further reading


A Comparative Bibliography: Regulatory Competition on Corporate Law
* Bakan, Joel. ''The New Corporation: How "Good" Corporations Are Bad for Democracy''. (2020) * 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. * Brown, Bruce

(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) * Davis, John P

(1904) * Davis, Joseph S

(1917) * Alan Dignam, and John Lowry, (2020) Company Law,
Oxford University Press Oxford University Press (OUP) is the university press A university press is an academic publishing Publishing is the activity of making information, literature, music, software and other content available to the public for sale or for fre ...

Oxford University Press
* 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) * Freedman, Charles. ''Joint-stock Enterprise in France, : From Privileged Company to Modern Corporation'' (1979) * Freund, Ernst
MCMaster.ca
''The Legal Nature of the Corporation'' (1897) * 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. * 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

(1912) * Sobel, Robert. ''The Age of Giant Corporations: a Microeconomic History of American Business''. (1984) * * PG Mahoney, 'Contract or Concession? An Essay on the History of Corporate Law' (2000) 34 Ga. Law Review 873 * PI Blumberg, ''The Multinational Challenge to Corporation Law'' (1993) * PL Davies and LCB Gower, ''Principles of Modern Company Law'' (6th edn Sweet and Maxwell 1997) chapters 2–4 * RR Formoy, ''The Historical Foundations of Company Law'' (Sweet and Maxwell 1923) 21 * P Frentrop, ''A History of Corporate Governance 1602–2002'' (Brussels et al., 2003) * S Kyd, ''A Treatise on the Law of Corporations'' (1793–1794) * J Micklethwait and A Wooldridge, ''The company: A short history of a revolutionary idea'' (Modern Library 2003) * W Blackstone, ''Commentaries on the Laws of England'' (1765) 455–473 * Tooze, Adam, "Democracy and Its Discontents", ''
The New York Review of Books ''The New York Review of Books'' (or ''NYREV'' or ''NYRB'') is a semi-monthly magazine with articles on literature, culture, economics, science and current affairs. Published in New York City, it is inspired by the idea that the discussion of i ...
'', vol. LXVI, no. 10 (6 June 2019), pp. 52–53, 56–57. "Democracy has no clear answer for the mindless operation of
bureaucratic The term bureaucracy () may refer both to a body of non-elected governing officials and to an administrative policy-making group. Historically, a bureaucracy was a government administration managed by departments staffed with non-elected offi ...

bureaucratic
and . We may indeed be witnessing its extension in the form of
artificial intelligence Artificial intelligence (AI) is intelligence Intelligence has been defined in many ways: the capacity for abstraction Abstraction in its main sense is a conceptual process where general rules and concept Concepts are defined as abstra ...

artificial intelligence
and
robotics Robotics is an interdisciplinary Interdisciplinarity or interdisciplinary studies involves the combination of two or more academic disciplines into one activity (e.g., a research project). It draws knowledge from several other fields like ...

robotics
. Likewise, after decades of dire warning, the
environmental problem Environmental issues are harmful effects of human activity on the biophysical environment. Environmental protection Environmental protection is the practice of protecting the natural environment by individuals, organizations and governments. Its o ...
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

*
US Corporate Law United States corporate law regulates the governance Governance comprises all of the processes of governing – whether undertaken by the government of a state (polity), state, by a market (economics), market, or by a social network, network ...
at Wikibooks
an Audio from a talk about the history of corporations and the English Law by Barrister Daniel Bennett
{{Authority control Companies Business law Corporate law Corporations, Legal entities Types of business entity