A corporation is an institution that is granted a charter A charter is the grant of authority or rights, stating that the granter formally recognizes the prerogative of the recipient to exercise the rights specified. It is implicit that the granter retains superiority , and that the recipient admits a limited (or inferior) status within the relationship, and it is within that sense that charters were recognizing it as a separate legal entity In the United States a Separate Legal Entity or SLE refers to a type of legal entity[disambiguation needed] with detached accountability. A business can be setup as a SLE to legally separate it from the individual or owner, such as a limited liability company or a corporation having its own privileges, and liabilities distinct from those of its members.[1] There are many different forms of corporations, most of which are used to conduct business A business is a legally recognized organization designed to provide goods and/or services to consumers. Businesses are predominant in capitalist economies, most being privately owned and formed to earn profit that will increase the wealth of its owners and grow the business itself. The owners and operators of a business have as one of their main.
Corporations exist as a product of corporate law Corporate law is the law of the most dominant kind of business enterprise in the modern world. Corporate law is the study of how shareholders, directors, employees, creditors, and other stakeholders such as consumers, the community and the environment interact with one another under the internal rules of the firm, and their rules balance the interests of its stakeholders A corporate stakeholder is a party that can affect or be affected by the actions of the business as a whole. The stakeholder concept was first used in a 1963 internal memorandum at the Stanford Research institute. It defined stakeholders as "those groups without whose support the organization would cease to exist." The theory was later: the management Management in all business and human organization activity is the act of getting people together to accomplish desired goals and objectives. Management comprises planning, organizing, staffing, leading or directing, and controlling an organization or effort for the purpose of accomplishing a goal. Resourcing encompasses the deployment and who operate the corporation; creditors A creditor is a party that has a claim to the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some property or service to the second party under the assumption (usually enforced by contract) that the second party will return an equivalent property or service. The second who loan it goods, services or money; shareholders A mutual shareholder or stockholder is an individual or company that legally owns one or more shares of stock in a joint stock company. A company's shareholders collectively own that company and are the members of the company by signing the memorandum of association . Thus, the typical goal of such companies is to enhance shareholder value who invest their capital In economics, capital or capital goods or real capital are factors of production used to create goods or services that are not themselves significantly consumed in the production process. Capital goods may be acquired with money or financial capital. In finance and accounting, capital generally refers to financial wealth, especially that used to; the employees who contribute their labor Labor economics seeks to understand the functioning and dynamics of the market for labor. Labor markets function through the interaction of workers and employers. Labor economics looks at the suppliers of labor services , the demands of labor services (employers), and attempts to understand the resulting pattern of wages, employment, and income; and the clients they serve. People work together in corporations to produce value and generate income Income is the consumption and savings opportunity gained by an entity within a specified time frame, which is generally expressed in monetary terms. However, for households and individuals, "income is the sum of all the wages, salaries, profits, interests payments, rents and other forms of earnings received... in a given period of time.". In modern times, corporations have become an increasingly dominant part of economic life. People rely on corporations for employment Employment is a contract between two parties, one being the employer and the other being the employee. An employee may be defined as: "A person in the service of another under any contract of hire, express or implied, oral or written, where the employer has the power or right to control and direct the employee in the material details of how, pensions, goods, services, economic growth and cultural development.
An important feature of corporation is limited liability. If a corporation fails, shareholders normally only stand to lose their investment, and employees will lose their jobs, but neither will be further liable for debts that remain owing to the corporation's creditors.
Despite not being natural persons, corporations are recognized by the law to have rights and responsibilities like actual people. Corporations can exercise human rights Human rights are "basic rights and freedoms to which all humans are entitled". The doctrine of human rights aims to identify the necessary positive and negative prerequisites for a "universal" minimal standard of justice, tolerance and human dignity that can be considered the public moral norms owed by and to individuals by the against real individuals and the state,[2] and they may be responsible for human rights violations.[3] Just as they are "born" into existence through its members obtaining a certificate of incorporation A certificate of incorporation is a legal document relating to the formation of a company or corporation. It is a license to form a corporation issued by state government. Its precise meaning depends upon the legal system in which it is used, but the two primary meanings are:, they can "die" when they lose money into insolvency A business may be 'cash flow insolvent' but 'balance sheet solvent' if it holds illiquid assets, particularly against short term debt that it cannot immediately realise if called upon to do so. Conversely, a business can have negative net assets showing on its balance sheet but still be cash flow solvent if ongoing revenue is able to meet debt. Corporations can even be convicted of criminal offences, such as fraud In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and is also a civil law violation. Many hoaxes are fraudulent, although those not made for personal gain are not technically frauds. Defrauding people of and manslaughter The law generally differentiates between levels of criminal culpability based on the mens rea, or state of mind. This is particularly true within the law of homicide, where murder requires either the intent to kill, a state of mind called malice, or malice aforethought, which may involve an unintentional killing but with a wilful disregard for.[4]
Although corporate law varies in different jurisdictions, there are five core characteristics of the business corporation:[5]
- Legal personality A legal person is a legal entity through which the law allows a group of natural persons to act as if they were a single composite individual for certain purposes, or in some jurisdictions, for a single person to have a separate legal personality other than their own. This legal fiction does not mean these entities are human beings, but rather
- Limited liability Limited liability is a concept whereby a person's financial liability is limited to a fixed sum, most commonly the value of a person's investment in a company or partnership with limited liability. In other words, if a company with limited liability is sued, then the plaintiffs are suing the company, not its owners or investors. A shareholder in a
- Transferable shares In financial markets, a share is a unit of account for various financial instruments including stocks , and investments in limited partnerships, and REITs. The common feature of all these is equity participation (limited in the case of preference shares)
- Centralized management under a board A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. The body sometimes has a different name, such as board of trustees, board of governors, board of managers, or executive board. It is often simply referred to as "the board." structure
- Shared ownership by contributors of capital.
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Q. Some says that dividend payment does not matter at all, is it true? Or, there are instances when dividend payment is beneficial for the corporation?
Asked by Mr. President - Thu Mar 6 09:10:24 2008 - - 1 Answers - 0 Comments
A. Assuming the corp. has issued a class of stock shares that include dividends, first check to see whether the Corp.'s By-Laws covers this issue. If it is at the discretion of the bd. of directors, it would be wiser to issue dividends early in the calendar year so that stockholders can determine how to plan their personal income strategies for their next tax return. Depending on the size of the dividend, issuing a dividend late in the year may be disadvantageous to stockholders who may be put in a position of paying higher taxes due to the inability to acquire sufficient "loses" to set off the dividend gain.
Answered by Phil D - Thu Mar 6 09:33:32 2008
