corporation

An artificial person or legal entity created by or under the authority of the laws of a state. An association of persons created by statute as a legal entity.

The law treats the corporation itself as a person which can sue and be sued. The corporation is distinct from the individuals who comprise it (shareholders). The corporation survives the death of its investors, as the shares can usually be transferred. Such entity subsists as a body politic under a special denomination, which is regarded in law as having a personality and existence distinct from that of its several members, and which is, by the same authority, vested with the capacity of continuous succession, irrespective of changes in its membership, either in perpetuity or for a limited term of years, and of acting as a unit or single individual in matters relating to the common purpose of the association, within the scope of the powers and authorities conferred upon such bodies by law. Dartmouth College v. Woodward, 17 U.S. (4 Wheat.) 518, 636, 657, 4 L.Ed. 629; U. S. v. Trinidad Coal Co., 137 U.S. 160, 11 S.Ct. 57, 34 L.Ed. 640.

See also affiliate company

- brother-sister corporation

- charitable corporation

- charitable organizations

- clearing corporation

- collapsible corporation

- cooperative corporation

- corporation (S corporation)

- domestic corporation

- dormant corporation

- foreign corporation

- municipal corporation

- non-profit corporation

- non-stock corporation

- parent company or corporation

- person

- public corporations

- registered corporation

- thin corporation.

Classification

According to the accepted definitions and rules, corporations are classified as follows:

Public and private corporations.

A public corporation is one created by the state for political purposes and to act as an agency in the administration of civil government, generally within a particular territory or subdivision of the state, and usually invested, for that purpose, with subordinate and local powers of legislation; such as a county, city, town, or school district. These are also sometimes called "political corporations."

See municipal corporation.

Private corporations are those founded by and composed of private individuals, for private purposes, as distinguished from governmental purposes, and having no political or governmental franchises or duties. The true distinction between public and private corporations is that the former are organized for governmental purposes, the latter not.

The term "public" has sometimes been applied to corporations of which the government owned the entire stock, as in the case of a state bank. But bearing in mind that "public" is here equivalent to "political," it will be apparent that this is a misnomer. Again the fact that the business or operations of a corporation may directly and very extensively affect the general public (as in the case of a railroad company or a bank or an insurance company) is no reason for calling it a public corporation. If organized by private persons for their own advantage,-or even if organized for the benefit of the public generally, as in the case of a free public hospital or other' charitable institution,-it is none the less a private corporation if it does not possess governmental powers or functions. The uses may in a sense be called "public," but the corporation is "private," as much so as if the franchises were vested in a single person. Dartmouth College v. Woodward, 17 U.S. (4 Wheat.) 562, 4 L.Ed. 629.

It is to be observed, however, that those corporations which serve the public or contribute to the comfort and convenience of the general public, though owned and managed by private interests, are now denominated "public-service corporations.".

Another distinction between public and private corporations is that the former are not voluntary associations (as the latter are) and that there is no contractual relation between the government and a public corporation or between the individuals who compose it. While the above are strict distinctions between "public" and "private" corporations, in common usage the term "public" corporation is frequently used to distinquish a business corporation whose shares are traded to and among the general public as opposed to a "private" (or "close" corporation) whose shares are not so traded.

Ecclesiastical and lay corporations.

In the English law, all corporations private are divided into ecclesiastical and lay, the former being such corporations as are composed exclusively of ecclesiastics organized for spiritual purposes, or for administering property held for religious uses, such as bishops and certain other dignitaries of the church and (formerly) abbeys and monasteries. 1 Bl.Comm. 470.

Lay corporations are those composed of laymen, and existing for secular or business purposes. This distinction is not recognized in American law. Corporations formed for the purpose of maintaining or propagating religion or of supporting public religious services, according to the rights of particular denominations, and incidentally owning and administering real and personal property for religious uses, are called "religious corporations," as distinguished from business corporations; but they are "lay" corporations, and not "ecclesiastical" in the sense of the English law.

Aggregate and sole corporations.

A corporation sole is one consisting of one person only, and his successors in some particular station, who are incorporated by law in order to give them some legal capacities and advantages, particularly that of perpetuity, which in their natural persons they could not have had. In this sense, the sovereign in England is a sole corporation, so is a bishop, so are some deans distinct from their several chapters, and so is every parson and vicar.

A corporation aggregate is one composed of a number of individuals vested with corporate powers; and a "corporation," as the word is used in general popular and legal speech, and as defined at the head of this title, means a "corporation aggregate."

Domestic and foreign.

With reference to the laws and the courts of any given state, a "domestic" corporation is one created by, or organized under, the laws of that state; a "foreign" corporation is one created by or under the laws of another state, government, or country.

See also domestic corporation

Subsidiary and parent corporations.

Subsidiary corporation is one in which another corporation (called parent corporation) owns at least a majority of the shares, and thus has control.

Other Compound and Descriptive Terms

- aggressor corporation

- brother-sister corporation

- collapsible corporation

- not-for-profit corporation

- corporation courts

- corporator

- incorporator

@ acquired corporation

The corporation which disappears as a result of a merger or acquisition.

@ acquiring corporation

The offerer in a merger or acquisition.

@ business corporation

One formed for the purpose of transacting business in the widest sense of that term, including not only trade and commerce, but manufacturing, mining, banking, insurance, transportation, and practically every form of commercial or industrial activity where the purpose of the organization is pecuniary profit; contrasted with religious, charitable, educational, and other like organizations, which are sometimes grouped in the statutory law of a state under the general designation of "corporations not for profit."

+

A corporation organized for the purpose of carrying on a business for profit. City of St. Louis v. Smith, 325 Mo. 471, 30 S.W.2d 729, 731.

See also corporation

@ close corporation

A corporation whose shares, or at least voting shares, are held by a single shareholder or closely-knit group of shareholders. Generally, there are no public investors and its shareholders are active in the conduct of the business. A close corporation is one which fills its own vacancies or in which power of voting is held through manipulation under fixed and virtually perpetual proxies. Brooks v. Willcuts, C.C.A.Minn., 78 F.2d 270, 273.

A corporation, the stock ownership of which is not widely dispersed. Instead, a few shareholders are in control of corporate policy and are in a position to benefit personally from such policy

@ closely held corporation

See close corporation

@ C corporation

A regular corporation governed by Subchapter C of the Internal Revenue Code. Distinguished from S corporations, which fall under Subchapter S of the Code.

See also S corporation

@ controlled corporation

A corporation where the majority of stock outstanding is held by one individual or one firm. Where there is complete domination and control of a corporation so that it has no independent identity, a court may disregard the corporate form and extend liability for corporate obligations beyond the confines of a corporation's separate entity whenever it is necessary to prevent fraud or achieve equity. Glenn v. Wagner, 67 N.C.App. 563, 313 S.E.2d 832, 839

@ corporation by estoppel

A corporation by estoppel comes about when parties, by their agreements or conduct, estop themselves from denying the existence of the corporation. Harris v. Stephens Wholesale Bldg. Supply Co., Inc., 54 Ala.App. 405, 309 So.2d 115, 117.

It is a doctrine which prevents a third person from holding an officer, director, or shareholder of a nonexistent corporation personally liable on an obligation entered into in the name of the nonexistent corporation. The theory is that the third person relied on the existence as a corporation and is now "estopped" from denying that the corporation existed

@ corporation de facto

One existing under color of law and in pursuance of an effort made in good faith to organize a corporation under the statute; an association of men claiming to be a legally incorporated company, and exercising the powers and functions of a corporation, but without actual lawful authority to do so. Its elements are a law or charter authorizing such a corporation, an attempt in good faith to comply with law authorizing its incorporation, and unintentional omission of essential requirements of the law or charter, and exercise in good faith of corporate functions under the law or charter. A corporation which has been defectively formed but which is not subject to collateral attack

@ corporation de jure

That which exists by reason of full compliance by incorporators with requirements of an existing law permitting organization of such corporation

@ corporation sole

Unusual type of corporation consisting of only one person whose successor becomes the corporation on his death or resignation; limited in the main today to bishops and heads of dioceses.

See also aggregate and sole.

@ eleemosynary corporation

Corporation with charitable functions and purposes.

+ eleemosynary corporation

A private corporation created for charitable and benevolent purposes. Charitable corporation.

See also charitable organizations

@ joint venture corporation

A corporation which has joined with other individuals or corporations within the corporate framework in some specific undertaking commonly found in oil, chemical, electronic and atomic fields.

@ migratory corporation

A corporation, organized under laws of another state than that of incorporators' residence for purpose of doing all or greater part of their business in state of their residence or in other state than that of incorporation. Toklan Royalty Corporation v. Tiffany, 193 Okl. 120, 141 P.2d 571, 573.

@ moneyed corporation

Moneyed corporations are, properly speaking, those dealing in money or in the business of receiving deposits, loaning money, and exchange; but in a wider sense the term is applied to all business corporations having a money capital and employing it in the conduct of their business.

@ non-stock corporation

Type of corporation where ownership is not recognized by stock; e.g. municipal corporation.

+ non-stock corporation

Species of corporation in which the members hold no shares of stock as in the case of mutual companies and religious and charitable corporations. Ownership is through the membership charter or agreement rather than through the usual issuance of stock

@ not-for-profit corporation

A corporation formed for some charitable or benevolent purpose and not for profit making and generally organized under special statutes for this purpose. Such corporations are afforded special tax treatment.

See also non-profit corporation

@ professional corporation

In most states such may be organized by those rendering personal services to public of a type which requires a license or other legal authorization and which prior to such statutory authorization could not be performed by a corporation. Includes, but is not limited to, public accountants, certified public accountants, chiropractors, osteopaths, physicians, surgeons, dentists, podiatrists, chiropodists, architects, veterinarians, optometrists, and attorneys at law. Tax benefits are one of several reasons for professional incorporation. Incorporation does not alter professional responsibility or privilege nor does it insulate principal from malpractice liability.

@ public-service corporations

Those whose operations serve the needs of the general public or conduce to the comfort and convenience of an entire community, such as public transportation, gas, water, and electric light companies. The business of such companies is said to be "affected with a public interest," and for that reason they are subject to legislative regulation and control to a greater extent than corporations not of this character.

See also quasi public corporation, below.

@ quasi corporation

A term applied to those bodies, or municipal societies, which, though not vested with the general powers of corporations, are yet recognized, by statutes or immemorial usage, as persons, or aggregate corporations, with precise duties, which may be enforced, and privileges, which may be maintained, by suits at law.

"Quasi corporation" is a phrase used to designate bodies which possess a limited number of corporate powers, and which are low down in the scale or grade of corporate existence, and is generally applied to a body which exercises certain functions of a corporate character, but which has not been created a corporation by any statute, general or special. There is a well-defined and marked distinction between municipal corporations proper and political or quasi corporations. Cities, towns, and villages are municipal corporations proper, while counties, townships, school districts, road districts, and the like are quasi corporations.

See quasi public corporation, below.

@ quasi public corporation

@ quasi-public corporation

This term is sometimes applied to corporations which are not strictly public, in the sense of being organized for governmental purposes, but whose operations contribute to the comfort, convenience, or welfare of the general public, such as telegraph and telephone companies, gas, water, and electric light companies, and irrigation companies. More commonly and more correctly styled "public-service corporations."

There is a large class of private corporations which on account of special franchises conferred on them owe a duty to the public which they may be compelled to perform. This class of corporations is known as public service corporations, and in legal phraseology as "quasi public corporations," or corporations affected with a public interest.

A "quasi public corporation" may be said to be a private corporation which has given to it certain powers of a public nature, such, for instance, as the power of eminent domain, in order to enable it to discharge its duties for the public benefit, in which respect it differs from an ordinary private corporation, the powers of which are given and exercised for the exclusive advantage of its stockholders.

The term is also applied to corporations of that class sometimes called "quasi municipal corporations," such as school districts, irrigation districts, township, etc.

@ S corporation

A small business corporation with a statutorily limited number of shareholders, which, under certain conditions, has elected to have its taxable income taxed to its shareholders at regular income tax rates. I.R.C. No. 1361 et seq.

Its major significance is the fact that S corporation status usually avoids the corporate income tax, and corporate losses can be claimed by the shareholders. This election is for federal tax purposes only; in terms of legal characteristics under state law, the "S" status corporation is no different than any other regular corporation.

@ shell corporation

A corporate frame, containing few, if any, assets, kept alive by required filings, generally for future use.

@ spiritual corporations

Corporations, the members of which are entirely spiritual persons, and incorporated as such, for the furtherance of religion and perpetuating the rights of the church.

@ Subchapter C corporation

A regular corporation subject to the provisions of Subchapter C (No.No. 301-386) of the Internal Revenue Code. Distinguished from an S corporation, which is governed by Subchapter S of the Code.

@ target corporation

Corporation attempted to be taken over in a tender offer or other type of takeover bid. A corporation viewed as having a good potential for takeover by another corporation or individual.

@ trading corporations

A commercial corporation engaged in buying and selling. The word "trading," is much narrower in scope than "business," as applied to corporations, and though a trading corporation is a business corporation, there are many business corporations which are not trading companies. Dartmouth College v. Woodward, 17 U.S. (4 Wheat.) 669, 4 L.Ed. 629.

@ tramp corporations

Companies chartered in one state without any intention of doing business therein, but which carry on their business and operations wholly in other states

@ Corporation Act

In English law, the statute 13 Car. II, St. 2, c. 1; by which it was provided that no person should thereafter be elected to office in any corporate town that should not, within one year previously, have taken the sacrament of the Lord's Supper, according to the rites of the Church of England; and every person so elected was also required to take the oaths of allegiance and supremacy. 4 Bl.Comm. 58. This statute is now repealed

@ corporation courts

Formerly, certain courts in Virginia described as follows: "For each city of the state, there shall be a court called a 'corporation court,' to be held by a judge, with like qualifications and elected in the same manner as judges of the county court."

@