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n. an organization formed with state governmental approval to act as an artificial person to carry on business (or other activities), which can sue or be sued, and (unless it is non-profit) can issue shares of stock to raise funds with which to start a business or increase its capital. One benefit is that a corporation's liability for damages or debts is limited to its assets, so the shareholders and officers are protected from personal claims, unless they commit fraud. For private business corporations the Articles of Incorporation filed with the Secretary of State of the incorporating state must include certain information, including the name of the responsible party or parties (incorporators and agent for acceptance of service), the amount of stock it will be authorized to issue, and its purpose. In some states the purpose may be a general statement of any purpose allowed by law, while others require greater specificity. Corporation shareholders elect a board of directors, which in turn adopts bylaws, chooses the officers and hires top management (which in smaller corporations are often the directors and/or shareholders). Annual meetings are required of both the shareholders and the Board, and major policy decisions must be made by resolution of the Board (which often delegates much authority to officers and committees). Issuance of stock of less than $300,000, with no public solicitation and relatively few shareholders, is either automatically approved by the state commissioner of corporations or requires a petition outlining the financing. Some states are considered lax in supervision, have low filing fees and corporate taxes and are popular incorporation states, but corporations must register with Secretary of States of other states where they do substantial business as a "foreign" corporation. Larger stock offerings and/or those offered to the general public require approval by the Securities and Exchange Commission after close scrutiny and approval of a public "prospectus" which details the entire operation of the corporation. There are also non-profit (or not for profit) corporations organized for religious, educational, charitable or public service purposes. Public corporations are those formed by a municipal, state or federal government for public purposes such as operating a dam and utility project. A close corporation is made up of a handful of shareholders with a working or familial connection which is permitted to operate informally without resolutions and regular Board meetings. A de jure corporation is one that is formally operated under the law, while a de facto corporation is one which operates as if it were legal, but without the Articles of Incorporation being valid. Corporations can range from the Corner Mini-Mart to General Electric. (See: articles of incorporation, bylaws, board of directors, close corporation, public corporation, de jure corporation, de facto corporation, shareholder, stock, securities)
corporationa group of persons who are deemed in law to be a single legal entity. The corporate entity is legally distinct from its members; it has legal personality and can hold property, sue and be sued in its own name as if it were a natural person. See COMPANY.
CORPORATION. An aggregate corporation is an ideal body, created by law,
composed of individuals united under a common name, the members of which
succeed each other, so that the body continues the same, notwithstanding the
changes of the individuals who compose it, and which for certain purposes is
considered as a natural person. Browne's Civ. Law, 99; Civ. Code of Lo. art.
418; 2 Kent's Com. 215. Mr. Kyd, (Corpor. vol. 1, p. 13,) defines a
corporation as follows: "A corporation, or body politic, or body
incorporate, is a collection of many; individuals united in one body, under
a special denomination, having perpetual succession under an artificial
form, and vested by the policy of the law, with a capacity of acting in
several respects as an individual, particularly of taking and granting
property, 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." In the case of
Dartmouth College against Woodward, 4 Wheat. Rep. 626, Chief Justice
Marshall describes a corporation to be "an artificial being, invisible,
intangible, and existing only in contemplation of law. Being the mere
creature of law," continues the judge, "it possesses only those properties
which the charter of its creation confers upon it, either expressly or as
incidental to its very existence. These are such as are supposed best
calculated to effect the object for which it was created. Among the most
important are immortality, and if the expression may be allowed,
individuality properties by which a perpetual succession of many persons are
considered, as the same, and may act as the single individual, They enable a
corporation to manage its own affairs, and to hold property without the
perplexing intricacies, the hazardous and endless necessity of perpetual
conveyance for the purpose of transmitting it from hand to hand. It is
chiefly for the purpose of clothing bodies of men, in succession, with these
qualities and capacities, that corporations were invented, and are in use."
See 2 Bl. Corn. 37.
2. The words corporation and incorporation are frequently confounded, particularly in the old books. The distinction between them is, however, obvious; the one is the institution itself, the other the act by which the institution is created.
3. Corporations are divided into public and private.
4. Public corporations, which are also called political, and sometimes municipal corporations, are those which have for their object the government of a portion of the state; Civil Code of Lo. art. 420 and although in such case it involves some private interests, yet, as it is endowed with a portion of political power, the term public has been deemed appropriate.
5. Another class of public corporations are those which are founded for public, though not for political or municipal purposes, and the, whole interest in which belongs to the government. The Bank of Philadelphia, for example, if the whole stock belonged exclusively to the government, would be a public corporation; but inasmuch as there are other owners of the stock, it is a private corporation. Domat's Civil Law, 452 4 Wheat. R. 668; 9 Wheat. R. 907 8 M'Cord's R. 377 1 Hawk's R. 36; 2 Kent's Corn. 222.
6. Nations or states, are denominated by publicists, bodies politic, and are said to have their affairs and interests, and to deliberate and resolve, in common. They thus become as moral persons, having an understanding and will peculiar to themselves, and are susceptible of obligations and laws. Vattel, 49. In this extensive sense the United States may be termed a corporation; and so may each state singly. Per Iredell, J. 3 Dall. 447.
7. Private corporations. In the popular meaning of the term, nearly every corporation is public, inasmuch as they are created for the public benefit; but if the whole interest does not belong to the government, or if the corporation is not created for the administration of political or municipal power, the corporation is private. A bank, for instance, may be created by the government for its own uses; but if the stock is owned by private persons, it is a private corporation, although it is created by the government, and its operations partake of a private nature. 9 Wheat. R. 907. The rule is the same in the case of canal, bridge, turnpike, insurance companies, and the like. Charitable or literary corporations, founded by private benefaction, are in point of law private corporations, though dedicated to public charity, or for the general promotion of learning. Ang. & Ames on Corp. 22.
8. Private corporations are divided into ecclesiastical and lay.
9. Ecclesiastical corporations, in the United States, are commonly called religious corporations they are created to enable religious societies to manage with more facility and advantage, the temporalities belonging to the church or congregation.
10. Lay corporations are divided into civil and eleemosynary. Civil corporations are created for an infinite variety of temporal purposes, such as affording facilities for obtaining loans of money; the making of canals, turnpike roads, and the like. And also such as are established for the advancement of learning. 1 Bl. Com. 471.
11. Eleemosynary corporations are such as are instituted upon a principle of charity, their object being the perpetual distribution of the bounty of the founder of them, to such persons as he has directed. Of this kind are hospitals for the relief of the impotent, indigent and sick, or deaf and dumb. 1 Kyd on Corp. 26; 4 Conn. R. 272; Angell & A. on Corp. 26.
12. Corporations, considered in another point of view, are either sole or aggregate.
13. A sole corporation, as its name implies, consists of only one person, to whom and his successors belongs that legal perpetuity, the enjoyment of which is denied to all natural persons. 1 Black Com. 469. Those corporations are not common in the United States. In those states, however, where the religious establishment of the church of England was adopted, when they were colonies, together with the common law on that subject, the minister of the parish was seised of the freehold, as persona ecclesiae, in the same manner as in England; and the right of his successors to the freehold being thus established was not destroyed by the abolition of the regal government, nor can it be divested even by an act of the state legislature. 9 Cranch, 828.
14. A sole corporation cannot take personal property in succession; its corporate capacity of taking property is confined altogether to real estate. 9 Cranch, 43.
15. An aggregate corporation consists of several persons, who are' united in one society, which is continued by a succession of members. Of this kind are the mayor or commonalty of a city; the heads and fellows of a college; the members of trading companies, and the like. 1 Kyd on Corp. 76; 2 Kent's Com. 221 Ang. & A. on Corp. 20. See, generally, Bouv. Inst. Index, h.t.