corporations: an overview
A corporation is a legal entity created through the laws of its state of incorporation. Individual states have the power to promulgate laws relating to the creation, organization and dissolution of corporations. Many states follow the Model Business Corporation Act. (See Minnesota's adoption.) State corporation laws require articles of incorporation to document the corporation's creation and to provide provisions regarding the management of internal affairs. Most state corporation statutes also operate under the assumption that each corporation will adopt bylaws to define the rights and obligations of officers, persons and groups within its structure. States also have registration laws requiring corporations that incorporate in other states to request permission to do in-state business.
There has also been a significant component of Federal corporations law since Congress passed the Securities Act of 1933, which regulates how corporate securities are issued and sold. Federal securities law also governs requirements of fiduciary conduct such as requiring corporations to make full disclosures to shareholders and investors.
The law treats a corporation as a legal "person" that has standing to sue and be sued, distinct from its stockholders. The legal independence of a corporation prevents shareholders from being personally liable for corporate debts. It also allows stockholders to sue the corporation through a derivative suit and makes ownership in the company (shares) easily transferable. The legal "person" status of corporations gives the business perpetual life; deaths of officials or stockholders do not alter the corporation's structure.
Corporations are taxable entities that fall under a different scheme from individuals. Although corporations have a "double tax" problem -- both corporate profits and shareholder dividends are taxed -- corporate profits are taxed at a lower rate than the rates for individuals.
menu of sources
U.S. Constitution and Federal Statutes
- U.S. Code:
- CRS Annotated Constitution
- Code of Federal Regulations:
Federal Judicial Decisions
State Judicial Decisions
- N.Y. Court of Appeals:
- NY Court of Appeals: Corporations Decisions
- Appellate Decisions from Other States
Key Internet Sources
- Securities and Exchange Commission
- Internal Revenue Service
- U.S. Department of Treasury
- Corporate Information from SEC Filings (EDGAR)
- EDGAR Electronic Filings with the SEC With Related Information
- Center for Corporate Law - University of Cincinnati College of Law
- Securities Law Home Page (Astarita)
- Stock Valuation:
- ABA Business Law Section
- US Chamber of Commerce
- Nolo: Corporations
- Association of Corporate Counsel
Useful Offnet (or Subscription - $) Sources
- Good Starting Point in Print: Robert W. Hamilton, Hamilton's Black Letter on Corporations, West Group (1997)
- LII Downloads