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lecture 22.docx

3 Pages

Business Admin
Course Code
BUSA 690
Peter Younkin

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The word "corporation" is generally synonymous with large publicly owned companies in United States. In United Kingdom, "company" is more frequently used as the legal term for any business incorporated under the Companies Act 2006. Large scale companies ("corporations" in business terminology in the US sense) will be PLC's in the United Kingdom and will usually have shares listed on a Stock Market. In British legal usage any registered company, created under the Companies Act 2006 and previous equivalent legislation, is, strictly, a particular subcategory of the wider category, "corporation". Such a company is created by the administrative process of registration under the Companies Act as a general piece of legislation. A corporation, in this British sense, can be a corporation sole which consists of a single office occupied by one person e.g. the monarch or certain bishops in England and Wales. Here, the office is recognized as separate from the individual who holds it. Other corporations are within the category of "corporation aggregate" which includes corporate bodies created directly by legislation such as the Local Government Act 1972; Universities and certain professional bodies created by Royal Charter; corporations such as industrial and provident societies created by registration under other general pieces of legislation and registered companies which are the subject matter of this article. In the United States, a company may or may not be a separate legal entity, and is often used synonymously with "firm" or "business." A corporation may accurately be called a company; however, a company should not necessarily be called a corporation, which has distinct characteristics. According to Black's Law Dictionary, in America a company means "a corporation — or, less commonly, an association, partnership or union — that carries on industrial enterprise." The defining feature of a corporation is its legal independence from the people who create it. If a corporation fails, its shareholders will lose their money, and employees will lose their jobs, though disproportionately affecting its workers as opposed to its upper executives. Shareholders, however owning a part piece of the company, are not liable for debts that remain owing to the corporation's creditors. This rule is called limited liability, and it is why corporations end with "Ltd." (or some variant like "Inc." and "plc"). In the words of British judge, Walton J, a company is... But despite this, under just about every legal system in existence and as per international norms, corporations have the same legal rights and obligations as actual humans. Corporations can exercise human rights against real individuals and the state, and they may be responsible for human rights violations. Just as they are "born" into existence through its members obtaining a certificate of incorporation, they can "die" when they lose money into insolvency. Corporations can even be convicted of criminal offences, such as fraud and manslaughter. Although some forms of companies are thought to have existed during Ancient Rome and Ancient Greece, the closest recognizable ancestors of the modern company did not appear until the second millennium. The first recognizable commercial associations were medieval guilds, where guild members agreed to abide by guild rules, but did not participate in ventures for common profit. The earliest forms of joint commercial enterprise under the lex mercatoria were in fact partnerships. With increasing international trade, Royal charters were increasingly granted in Europe (notably in England and Holland) to merchant adventurers. The Royal charters usually conferred special privileges on the trading company (including, usually, some form of monopoly). Originally, traders in these entities traded stock on their own account, but later the members came to operate on joint account and with joint stock, and the new Joint stock company was born. Early companies were purely economic ventures; it was only a belatedly established benifit of holding joint stock that the company's stock could not be seized for the debts of any individual member. The development of company law in Europe was hampered by two notorious "bubbles" (the South Sea Bubble in England and the Tulip Bulb Bubble in the Dutch Republic) in the 17th century, which set the development of companies in the
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