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{{Short description|Legal entity incorporated through a legislative or registration process}}
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[[File:New McDonald's restaurant in Mount Pleasant, Iowa.jpg|thumb|upright=0.95|[[McDonald's|McDonald's Corporation]] is one of the most recognizable corporations in the world.]]
{{Companies law}}
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A '''corporation''' or '''body corporate''' is an individual or a group of people, such as an association or [[company]], that has been authorized by the [[State (polity)|state]] to act as a single entity (a legal entity recognized by private and public law as "born out of statute"; a [[legal person]] in a legal context) and recognized as such in [[Corporate law|law]] for certain purposes.<ref>{{Cite journal|last=Hirst|first=Scott|date=2018-07-01|title=The Case for Investor Ordering|url=https://scholarship.law.bu.edu/faculty_scholarship/343|journal=The Harvard Law School Program on Corporate Governance Discussion Paper|volume=2017-13|access-date=2020-11-16|archive-date=2021-01-17|archive-url=https://web.archive.org/web/20210117120553/https://scholarship.law.bu.edu/faculty_scholarship/343/|url-status=live}}</ref>'''{{rp|10}}''' Early incorporated entities were established by [[charter]] (i.e., by an ''[[ad hoc]]'' act granted by a monarch or passed by a parliament or legislature). Most [[jurisdiction]]s now allow the creation of new corporations through [[List of company registers|registration]]. Corporations come in many different types but are usually divided by the law of the jurisdiction where they are chartered based on two aspects: whether they can issue [[share capital|stock]], or whether they are formed to make a [[profit (accounting)|profit]].<ref>{{Cite web|url=https://www.corpnet.com/types-of-corporations/#gfp|title=Types Of Corporations {{!}} Incorporate A Business|website=www.corpnet.com|language=en|access-date=2017-06-10|archive-url=https://web.archive.org/web/20171015152228/https://www.corpnet.com/types-of-corporations/#gfp|archive-date=2017-10-15|url-status=dead}}</ref> Depending on the number of owners, a corporation can be classified as ''aggregate'' (the subject of this article) or ''[[corporation sole|sole]]'' (a legal entity consisting of a single incorporated office occupied by a single [[natural person]]).

Registered corporations have a [[legal personality]] recognized by local authorities and their shares are owned by shareholders,<ref>{{cite book |last1=Pettet |first1=B. G. |title=Company Law |publisher=Pearson Education |year=2005 |page=151 |quote=Reading the above, makes it possible to forget that the shareholders are the ''owners'' of the company.}}</ref><ref>{{cite book |last1=Courtney |first1=Thomas B. |title=The Law of Private Companies |publisher=Bloomsbury Professional |year=2002 |edition=2nd |at=4.001}}</ref> whose liability is generally [[limited liability|limited]] to their investment. One of the attractive early advantages corporations offered to their [[investors]], compared to earlier business entities like [[sole proprietorship]]s and [[joint partnership]]s, was limited liability. Limited liability separates control of a company from ownership and means that a passive shareholder in a corporation will not be personally liable either for contractually agreed obligations of the corporation, or for [[tort]]s (involuntary harms) committed by the corporation against a third party (acts done by the controllers of the corporation).<ref>{{Citation |title=Liability of Companies, Shareholders and Directors |date=2020 |work=Sustainability and Corporate Mechanisms in Asia |pages=235–283 |editor-last=Lim |editor-first=Ernest |url=https://www.cambridge.org/core/books/abs/sustainability-and-corporate-mechanisms-in-asia/liability-of-companies-shareholders-and-directors/CDEDAD9B555575037800AD3FF0FB559B |access-date=2024-12-18 |series=International Corporate Law and Financial Market Regulation |place=Cambridge |publisher=Cambridge University Press |doi=10.1017/9781108658508.007 |isbn=978-1-108-49451-9|url-access=subscription }}</ref>

Where [[Local ordinance|local law]] distinguishes corporations by their ability to issue [[stock]], corporations allowed to do so are referred to as ''stock corporations''; one type of investment in the corporation is through stock, and owners of stock are referred to as ''stockholders'' or ''[[shareholder]]s''. Corporations not allowed to issue stock are referred to as ''non-stock corporations''; i.e. those who are considered the owners of a non-stock corporation are persons (or other entities) who have obtained membership in the corporation and are referred to as a ''member'' of the corporation. Corporations chartered in regions where they are distinguished by whether they are allowed to be for-profit are referred to as ''for-profit'' and ''not-for-profit'' corporations, respectively.

Shareholders do not typically actively manage a corporation; shareholders instead elect or appoint a [[board of directors]] to control the corporation in a [[fiduciary]] capacity. In most circumstances, a shareholder may also serve as a director or officer of a corporation. Countries with [[co-determination]] employ the practice of workers of an enterprise having the right to vote for representatives on the board of directors in a company.

== History ==
{{see also|Collegium (ancient Rome)|List of oldest companies}}
[[File: Stora Kopparberg 1288.jpg|thumb|1/8 share of the [[Falun Mine|Stora Kopparberg]] mine, dated June 16, 1288]]
The word "corporation" derives from ''corpus'', the [[Latin]] word for body, or a "body of people". By the time of [[Justinian I|Justinian]] (reigned 527–565), [[Roman law]] recognized a range of corporate entities under the names ''Universitas'', ''corpus'' or ''collegium''. Following the passage of the ''[[Lex Julia]]'' during the reign of [[Julius Caesar]] as [[Roman consul|Consul]] and [[Roman dictator|Dictator]] of the [[Roman Republic]] (49–44 BC), and their reaffirmation during the reign of [[Augustus|Caesar Augustus]] as ''[[Princeps senatus]]'' and [[Imperator]] of the [[Roman army|Roman Army]] (27 BC–14 AD), ''collegia'' required the approval of the [[Roman Senate]] or the [[Roman emperor|Emperor]] in order to be [[Charter|authorized as legal bodies]].<ref name="de Ligt 2001">{{Cite journal|last=de Ligt|first=L.|date=2001|title=D. 47,22, 1, pr.-1 and the Formation of Semi-Public "Collegia"|url=https://www.jstor.org/stable/41539517|journal=Latomus|volume=60|issue=2|pages=346–349|jstor=41539517|issn=0023-8856|access-date=2021-06-18|archive-date=2020-11-12|archive-url=https://web.archive.org/web/20201112195606/https://www.jstor.org/stable/41539517|url-status=live}}</ref> These included the state itself (the ''Populus Romanus''), municipalities, and such private associations as sponsors of a [[Cult (religious practice)|religious cult]], [[Burial society|burial clubs]], political groups, and guilds of craftsmen or traders. Such bodies commonly had the right to own property and make contracts, to receive gifts and legacies, to sue and be sued, and, in general, to perform legal acts through representatives.<ref>{{Cite book|last=Davenport|first=Caillan|url=https://books.google.com/books?id=JsyCDwAAQBAJ&q=roman+contract+feeding+of+the+sacred+geese&pg=PT82|title=A History of the Roman Equestrian Order|date=2018-12-31|publisher=Cambridge University Press|isbn=978-1-108-75017-2|language=en}}</ref> Private associations were granted designated privileges and liberties by the emperor.<ref>Harold Joseph Berman, ''Law and Revolution'' (vol. 1)'': The Formation of the Western Legal Tradition'', Cambridge: Harvard University Press, 1983, pp. 215–216. {{ISBN|0-674-51776-8}}</ref>

The concept of the corporation was revived in the [[Middle Ages]] with the recovery and annotation of Justinian's {{Lang|la|[[Corpus Juris Civilis]]}} by the [[glossator]]s and their successors the [[postglossators|commentators]] in the 11th–14th centuries. Particularly important in this respect were the Italian jurists [[Bartolus de Saxoferrato]] and [[Baldus de Ubaldis]], the latter of whom connected the corporation to the metaphor of the [[body politic]] to describe the [[state (polity)|state]].<ref>{{cite book|last=Canning|first=Joseph|year=1996|title=A History of Medieval Political Thought: 300–1450|place=Abingdon|publisher=Routledge|isbn=978-0-415-39415-4|url=https://books.google.com/books?id=jx_KAgAAQBAJ|page=172}}</ref><ref>{{cite book|last=Canning|first=Joseph|year=2011|title=Ideas of Power in the Late Middle Ages, 1296–1417|url=https://books.google.com/books?id=fpMdtNgggN8C|place=Cambridge|publisher=Cambridge University Press|isbn=978-1-107-01141-0|pages=145–46}}</ref>

Early entities which carried on business and were the subjects of legal rights included the [[collegium]] of [[ancient Rome]] and the ''[[sreni]]'' of the [[Maurya Empire]] in ancient India.<ref>Vikramaditya S. Khanna (2005). [https://ssrn.com/abstract= ''The Economic History of the Corporate Form in Ancient India.''] {{Webarchive|url=https://web.archive.org/web/20090327104142/http://ssrn.com/abstract= |date=2009-03-27 }} [[University of Michigan]].</ref> In medieval Europe, churches became incorporated, as did local governments, such as the [[City of London Corporation]]. The point was that the incorporation would survive longer than the lives of any particular member, existing in perpetuity. The alleged oldest commercial corporation in the world, the [[Falun Mine|Stora Kopparberg]] mining community in [[Falun]], [[Sweden]], obtained a [[charter]] from King [[Magnus Eriksson]] in 1347.

In [[Middle Ages|medieval Europe]], traders would do business through [[common law]] constructs, such as [[partnership]]s. Whenever people acted together with a view to profit, the law deemed that a partnership arose. Early [[guild]]s and [[Livery company|livery companies]] were also often involved in the [[restraint of trade|regulation of competition]] between traders.{{Citation needed|date=September 2024}}

=== Mercantilism ===
{{See also|Mercantilism}}
Dutch and English chartered companies, such as the [[Dutch East India Company]] (also known by its Dutch initials: VOC) and the [[Hudson's Bay Company]], were created to lead the colonial ventures of European nations in the 17th century. Acting under a charter sanctioned by the Dutch government, the Dutch East India Company defeated [[Portugal|Portuguese]] forces and established itself in the [[Maluku Islands|Moluccan Islands]] in order to profit from the [[Europe]]an demand for [[spice]]s. Investors in the VOC were issued paper certificates as proof of share ownership, and were able to trade their shares on the original [[Amsterdam Stock Exchange]]. Shareholders were also explicitly granted [[limited liability]] in the company's royal charter.<ref>{{cite book |first=Om |last=Prakash |title=European Commercial Enterprise in Pre-Colonial India |publisher=Cambridge University Press |location=Cambridge |date=1998}}</ref>

In England, the government created corporations under a [[royal charter]] or an [[Act of Parliament]] with the grant of a [[monopoly]] over a specified territory. The best-known example, established in 1600, was the [[East India Company]] of [[London]]. [[Elizabeth I of England|Queen Elizabeth I]] granted it the exclusive right to trade with all countries to the east of the [[Cape of Good Hope]]. Some corporations at this time would act on the government's behalf, bringing in revenue from its exploits abroad. Subsequently, the company became [[company rule in India|increasingly integrated]] with English and later British military and colonial policy, just as most corporations were essentially dependent on the [[Royal Navy]]'s ability to control trade routes.

Labeled by both contemporaries and historians as "the grandest society of merchants in the universe", the English East India Company would come to symbolize the dazzlingly rich potential of the corporation, as well as new methods of business that could be both brutal and exploitative.<ref>{{cite book |first=John |last=Keay |title=The Honorable Company: A History of the English East India Company |publisher=MacMillan |location=New York |date=1991}}</ref> On 31 December 1600, Queen Elizabeth I granted the company a 15-year monopoly on trade to and from the [[East Indies]] and [[Africa]].<ref>{{cite web|url=http://web.utk.edu/~gerard/romanticpolitics/britisheastindia.html |title=British East India Company |first1=Gerard |last1=Cohen-Vrignaud |first2=Stephanie |last2=Metz |first3=Jody |last3=Dunville |first4=Shannon |last4=Heath |first5=Julia P. |last5=McLeod |first6=Kat |last6=Powell |first7=Brent |last7=Robida |first8=John |last8=Stromski |first9=Brandon |last9=Haynes|access-date=19 January 2017 |archive-url=https://web.archive.org/web/20161220082932/http://web.utk.edu/~gerard/romanticpolitics/britisheastindia.html |archive-date=20 December 2016 |url-status=dead}}</ref> By 1711, shareholders in the East India Company were earning a [[return on investment|return on their investment]] of almost 150 per cent. Subsequent stock offerings demonstrated just how lucrative the company had become. Its first stock offering in 1713–1716 raised £418,000, and its second in 1717–1722 raised £1.6&nbsp;million.<ref>''Ibid.'' at p. 113{{Full citation needed|date=August 2020}}</ref>

A similar [[chartered company]], the [[South Sea Company]], was established in 1711 to trade in the Spanish South American colonies, but met with less success. The South Sea Company's monopoly rights were supposedly backed by the [[Treaty of Utrecht]], signed in 1713 as a settlement following the [[War of the Spanish Succession]], which gave [[Kingdom of Great Britain|Great Britain]] an ''[[asiento]]'' to trade in the region for thirty years. In fact, the Spanish remained hostile and let only one ship a year enter. Unaware of the problems, investors in Britain, enticed by extravagant promises of profit from [[Corporate promoter|company promoters]], bought thousands of shares. By 1717, the South Sea Company was so wealthy (still having done no real business) that it assumed the [[government debt|public debt]] of the British government. This accelerated the inflation of the share price further, as did the [[Bubble Act|Bubble Act 1720]], which (possibly with the motive of protecting the South Sea Company from competition) prohibited the establishment of any companies without a royal charter. The share price rose so rapidly that people began buying shares merely in order to sell them at a higher price, which in turn led to higher share prices. This was the first [[economic bubble|speculative bubble]] the country had seen, but by the end of 1720, the bubble had "burst", and the share price sank from £1,000 to under £100. As bankruptcies and recriminations ricocheted through government and high society, the mood against corporations and errant directors was bitter.

[[File:South-sea-bubble-chart.png|thumb|right|Chart of the [[South Sea Company]]'s stock prices. The rapid inflation of the stock value in the 1710s led to the [[Bubble Act|Bubble Act 1720]], which restricted the establishment of companies without a [[royal charter]].]]

In the late 18th century, [[Stewart Kyd]], the author of the first treatise on [[corporate law]] in English, defined a corporation as:

{{blockquote|a collection of many individuals united into one body, under a special denomination, having [[perpetual succession]] under an artificial form, and vested, by the policy of the law, with the capacity of acting, in several respects, as an individual, particularly of taking and granting property, of 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.|A Treatise on the Law of Corporations, Stewart Kyd (1793–1794)}}

=== Development of modern company law ===
Due to the late 18th century abandonment of [[Mercantilism|mercantilist]] economic theory and the rise of [[classical liberalism]] and [[laissez-faire]] economic theory due to a revolution in [[economics]] led by [[Adam Smith]] and other economists, corporations transitioned from being government or [[guild]] affiliated entities to being public and private economic entities free of governmental directions.<ref>{{Cite web|url=http://political-economy.com/adam-smith-laissez-faire/|title=Adam Smith Laissez-Faire|website=political-economy.com|date=24 July 2010 |language=en-US|access-date=2017-06-10|archive-date=2010-07-31|archive-url=https://web.archive.org/web/20100731092626/http://political-economy.com/adam-smith-laissez-faire/|url-status=live}}</ref> Smith wrote in his 1776 work ''[[The Wealth of Nations]]'' that mass corporate activity could not match private entrepreneurship, because people in charge of others' money would not exercise as much care as they would with their own.<ref>A Smith, ''[[An Inquiry into the Nature and Causes of the Wealth of Nations]]'' (1776), Book V, ch 1, para 107.</ref>

==== Deregulation ====
[[File: Jack and the Giant Joint-Stock.jpg|thumb|"Jack and the Giant Joint-Stock", a cartoon in ''Town Talk'' (1858) satirizing the 'monster' joint-stock economy that came into being after the [[Joint Stock Companies Act 1844]]]]
The British [[Bubble Act 1720]]'s prohibition on establishing companies remained in force until its repeal in 1825. By this point, the [[Industrial Revolution]] had gathered pace, pressing for legal change to facilitate business activity.<ref>See [[Bubble Companies, etc. Act 1825]], 6 Geo 4, c 91</ref> The repeal was the beginning of a gradual lifting on restrictions, though business ventures (such as those chronicled by [[Charles Dickens]] in ''[[Martin Chuzzlewit]]'') under primitive companies legislation were often scams. Without cohesive regulation, proverbial operations like the "Anglo-Bengalee Disinterested Loan and Life Assurance Company" were undercapitalized ventures promising no hope of success except for richly paid promoters.<ref>See [[C Dickens]], ''[[Martin Chuzzlewit]]'' (1843) [[s:Martin Chuzzlewit/Chapter 27|ch 27]]</ref>

The process of [[incorporation (business)|incorporation]] was possible only through a [[royal charter]] or a [[local and personal Acts of Parliament in the United Kingdom|private act]] and was limited, owing to Parliament's jealous protection of the privileges and advantages thereby granted. As a result, many businesses came to be operated as [[Voluntary association|unincorporated associations]] with possibly thousands of members. Any consequent [[Lawsuit|litigation]] had to be carried out in the joint names of all the members and was almost impossibly cumbersome. Though Parliament would sometimes grant a private act to allow an individual to represent the whole in legal proceedings, this was a narrow and necessarily costly expedient, allowed only to established companies.

Then, in 1843, [[William Ewart Gladstone|William Gladstone]] became the chairman of a Parliamentary Committee on Joint Stock Companies, which led to the [[Joint Stock Companies Act 1844]], regarded as the first modern piece of company law.<ref>''Report of the Parliamentary Committee on Joint Stock Companies'' (1844) in ''British Parliamentary Papers'', vol. VII</ref> The Act created the [[Registrar of Companies|Registrar of Joint Stock Companies]], empowered to register companies by a two-stage process. The first, provisional, stage cost £5 and did not confer corporate status, which arose after completing the second stage for another £5. For the first time in history, it was possible for ordinary people through a simple registration procedure to incorporate.<ref>{{cite book|url=https://books.google.com/books?id=LQflMqcZyOoC|title=Introduction to Company Law|author=Paul Lyndon Davies|year=2010|publisher=Oxford University Press|page=1|isbn=978-0-19-960132-5}}</ref> The advantage of establishing a company as a [[Legal personality|separate legal person]] was mainly administrative, as a unified entity under which the rights and duties of all investors and managers could be channeled.

==== Limited liability ====
However, there was still no limited liability and company members could still be held responsible for unlimited losses by the company.<ref>''Re Sea Fire and Life Assurance Co., Greenwood's Case'' (1854) 3 De GM&G 459</ref> The next, crucial development, then, was the [[Limited Liability Act 1855]], passed at the behest of the then Vice President of the Board of Trade, [[Robert Lowe]]. This allowed investors to limit their liability in the event of business failure to the amount they invested in the company – [[shareholder]]s were still liable directly to [[creditor]]s, but just for the unpaid portion of their [[share (finance)|shares]]. (The principle that shareholders are liable to the corporation had been introduced in the Joint Stock Companies Act 1844.)

The 1855 Act allowed limited liability to companies of more than 25 members (shareholders). [[Insurance|Insurance companies]] were excluded from the act, though it was standard practice for insurance contracts to exclude action against individual members. Limited liability for insurance companies was allowed by the [[Companies Act 1862]].

This prompted the English periodical ''[[The Economist]]'' to write in 1855 that "never, perhaps, was a change so vehemently and generally demanded, of which the importance was so much overrated."<ref>{{cite web|url=http://www.ehs.org.uk/ehs/conference2004/assets/AchesonTurnerPaper.pdf |title=The Impact of Limited Liability on Ownership and Control: Irish Banking, 1877–1914 |first1=Graeme G. |last1=Acheson |first2=John D. |last2=Turner |publisher=School of Management and Economics, Queen's University of Belfast |access-date=2011-11-16 |url-status=dead |archive-url=https://web.archive.org/web/20120113082939/http://www.ehs.org.uk/ehs/conference2004/assets/AchesonTurnerPaper.pdf |archive-date=2012-01-13 }} and {{cite web|url=http://www1.fee.uva.nl/fm/conference/legal/ehr_2006_%20Acheson%20and%20Turner.pdf |title=The Impact of Limited Liability on Ownership and Control: Irish Banking, 1877–1914 |first1=Graeme G. |last1=Acheson |first2=John D. |last2=Turner |work=Economic History Review |date=2006 |access-date=2011-11-16 |url-status=dead |archive-url=https://web.archive.org/web/20120111172110/http://www1.fee.uva.nl/fm/conference/legal/ehr_2006_%20Acheson%20and%20Turner.pdf |archive-date=2012-01-11 }}.</ref> The major error of this judgment was recognised by the same magazine more than 70 years later, when it claimed that, "[t]he economic historian of the future... may be inclined to assign to the nameless inventor of the principle of limited liability, as applied to trade corporations, a place of honour with [[James Watt|Watt]] and [[George Stephenson|Stephenson]], and other pioneers of the Industrial Revolution. "<ref>''Economist'', December 18, 1926, at 1053, as quoted in Mahoney, ''supra'', at 875.</ref>

These two features – a simple registration procedure and limited liability – were subsequently codified into the landmark 1856 [[Joint Stock Companies Act 1856|Joint Stock Companies Act]]. This was subsequently consolidated with a number of other statutes in the Companies Act 1862, which remained in force for the rest of the century, up to and including the time of the decision in ''[[Salomon v A Salomon & Co Ltd]]''.<ref>''[[Salomon v A Salomon & Co Ltd]]'' [1897] AC 22</ref>

The legislation quickly led to a railway boom, resulting in a surge in the formation of companies. However, in the later nineteenth century, a period of depression set in, causing many of these companies to collapse and become insolvent. Strong academic, legislative, and judicial opinions emerged, opposing the notion that businessmen could escape accountability for their role in the failing businesses.

==== Further developments ====
[[File:LordLindley cropp.jpg|thumb|right|[[Nathaniel Lindley, Baron Lindley|Lindley LJ]] was the leading expert on partnerships and company law in the ''[[Salomon v A Salomon & Co Ltd|Salomon v. Salomon & Co.]]'' case. The landmark case confirmed the [[corporate identity|distinct corporate identity]] of the company.]]
In 1892, [[Germany]] introduced the {{Lang|de|[[Gesellschaft mit beschränkter Haftung]]}} with a separate [[legal personality]] and limited liability even if all the shares of the company were held by only one person. This inspired other countries to introduce corporations of this kind.

The last significant development in the history of companies was the 1897 decision of the House of Lords in ''[[Salomon v A Salomon & Co Ltd|Salomon v. Salomon & Co.]],'' where the House of Lords confirmed the separate legal personality of the company, and that the liabilities of the company were separate and distinct from those of its owners.

In the [[United States]], forming a corporation usually required an act of legislation until the late 19th century. Many private firms, such as [[Andrew Carnegie|Carnegie]]'s steel company and [[John D. Rockefeller|Rockefeller]]'s [[Standard Oil]], avoided the corporate model for this reason (as a [[Trust law|trust]]). State governments began to adopt more permissive corporate laws from the early 19th century, although these were all restrictive in design, often with the intention of preventing corporations from gaining too much wealth and power.<ref name="Corporate Law textbook">{{Citation|last1=Smiddy|first1=Linda O.|last2=Cunningham|first2=Lawrence A.|title=Corporations and Other Business Organizations: Cases, Materials, Problems|publisher=LexisNexis|year=2010|edition=Seventh|pages=228–231, 241|isbn=978-1-4224-7659-8}}</ref>

In 1896, [[New Jersey]] was the first state to adopt an "enabling" corporate law, with the goal of attracting more business to the state.<ref>[https://books.google.com/books?id=ftzqaBv7X_sC&pg=PA159 The Law of Business Organizations] {{Webarchive|url=https://web.archive.org/web/20230105140507/https://books.google.com/books?id=ftzqaBv7X_sC&pg=PA159 |date=2023-01-05 }}, Cengage Learning</ref> In 1899, Delaware followed New Jersey's lead by enacting an enabling corporate statute. However, Delaware only emerged as the leading corporate state after the enabling provisions of the 1896 New Jersey corporate law were repealed in 1913.<ref name = "Corporate Law textbook"/>

The end of the 19th century saw the emergence of [[Holding company|holding companies]] and corporate [[Mergers and acquisitions|mergers]] creating larger corporations with dispersed shareholders. Countries began enacting [[Competition law|antitrust]] laws to prevent anti-competitive practices and corporations were granted more legal rights and protections. The 20th century witnessed a proliferation of laws allowing for the creation of corporations through registration worldwide. These laws played a significant role in driving economic booms in many countries both before and after World War I. Another major post World War I shift was toward the development of [[Conglomerate (company)|conglomerates]], in which large corporations purchased smaller corporations to expand their industrial base.

Starting in the 1980s, many countries with large state-owned corporations began moving toward [[privatization]], which involved selling publicly owned (or 'nationalized') services and enterprises to corporations. [[Deregulation]] aimed at reducing the regulation of corporate activity, often accompanied privatization as part of a laissez-faire policy.

== Ownership and control ==
A corporation is, at least in theory, owned and controlled by its members. In a [[joint-stock company]], the members are known as shareholders, and each of their shares in the ownership, control, and profits of the corporation is determined by the portion of shares in the company that they own. Thus, a person who owns a quarter of the shares of a joint-stock company owns a quarter of the company, is entitled to a quarter of the profit (or at least a quarter of the profit given to shareholders as dividends) and has a quarter of the votes capable of being cast at general meetings.

In another kind of corporation, the legal document which established the corporation or which contains its current rules will determine the requirements for membership in the corporation. What these requirements are depends on the kind of corporation involved. In a [[worker cooperative]], the members are people who work for the cooperative. In a [[credit union]], the members are people who have accounts with the credit union.<ref>{{cite book |title=Principles of Finance |first1=Scott |last1=Besley |first2=Eugene |last2=Brigham |publisher=Cengage Learning |year=2008 |isbn=978-0-324-65588-9 |edition=4th |page=[https://archive.org/details/principlesoffina0000besl_4edi/page/105 105] |url=https://archive.org/details/principlesoffina0000besl_4edi/page/105 }}</ref>

The day-to-day activities of a corporation are typically controlled by individuals appointed by the members. In some cases, this will be a single individual but more commonly corporations are controlled by a committee or by committees. Broadly speaking, there are two kinds of committee structure.
* A single committee known as a [[board of directors]] is the method favored in most [[common law]] countries. Under this model, the board of directors is composed of both executive and non-executive directors, the latter being meant to supervise the former's management of the company.
* A two-tiered committee structure with a [[supervisory board]] and a [[Vorstand|managing board]] is common in [[civil law (legal system)|civil law]] countries.<ref>{{cite web |title=Company & Commercial – Netherlands: In a nutshell – one-tier boards |date=10 April 2012 |publisher=International Law Office |url=http://www.internationallawoffice.com/newsletters/detail.aspx?g=f4815d3b-0de3-44d3-81d8-16114b49b8d8 |access-date=5 May 2013 |archive-date=16 January 2014 |archive-url=https://web.archive.org/web/20140116125800/http://www.internationallawoffice.com/newsletters/detail.aspx?g=f4815d3b-0de3-44d3-81d8-16114b49b8d8 |url-status=dead }}</ref>

In countries with [[co-determination]] (such as in [[Germany]]), workers elect a fixed fraction of the corporation's board.

=== Formation ===
Historically, corporations were created by a charter granted by the government. As explained above, such charters were often enacted as [[Public and private bills|private bills]].

Today, a corporation is formed, or [[Incorporation (business)|incorporated]], by registering with the state, province, or national government and regulated by the laws enacted by that government. Registration is the main prerequisite to the corporation's assumption of limited liability. The law sometimes requires the corporation to designate its principal address, as well as a [[registered agent]] (a person or company designated to receive legal service of process). It may also be required to designate an [[Law of agency|agent]] or other legal representatives of the corporation.{{citation needed|date=August 2012}}

Generally, a corporation files [[articles of incorporation]] with the government, laying out the general nature of the corporation, the amount of stock it is authorized to issue, and the names and addresses of directors. Once the articles are approved, the corporation's directors meet to create [[By-law|bylaws]] that govern the internal functions of the corporation, such as meeting procedures and officer positions.

In theory, a corporation cannot own its own stock. An exception is [[treasury stock]], where the company essentially buys back stock from its shareholders, which reduces its outstanding shares. This essentially becomes the equivalent of unissued capital, where it is not classified as an asset on the balance sheet (passive capital).

Under the [[internal affairs doctrine]], the law of the jurisdiction in which a corporation is incorporated will govern its internal activities—that is, conflicts between shareholders and managers such as the board of directors and corporate officers.<ref name="LoPucki_Page_74">{{cite book |last1=LoPucki |first1=Lynn M. |last2=Verstein |first2=Andrew |author1-link=Lynn M. LoPucki |title=Business Associations: A Systems Approach |edition=2nd |date=2024 |publisher=Aspen Publishing |location=Burlington, Massachusetts |isbn=9798892073653 |pages=74–75 |url=https://books.google.com/books?id=UMIG0QEACAAJ&pg=PA74 |access-date=November 15, 2024}}</ref>   If a corporation operates outside its home state, it is usually required to register with other governments as a [[foreign corporation]] and must formally appoint a [[registered agent]] to accept service of process within such other jurisdictions.<ref name="LoPucki_Page_74" />  A foreign corporation is almost always subject to the laws of its host state pertaining to external affairs such as [[employment]], [[crime]]s, [[contract]]s, [[Lawsuit|civil actions]], and the like.{{citation needed|date=August 2012}}

=== Naming ===
Corporations generally have a distinct name. Historically, some corporations were named after the members of their boards of directors: for example, the "[[President and Fellows of Harvard College]]" is the name of one of the two governing boards of [[Harvard University]], but it is also the exact name under which Harvard was legally incorporated.<ref name="GoverningHarvard">{{cite news |last1=Chait |first1=Richard P. |last2=Daniel |first2=D. Ronald |last3=Lorsch |first3=Jay W. |last4=Rosovsky |first4=Henry |author-link2=Ron Daniel |author-link3=Jay Lorsch |author-link4=Henry Rosovsky |title=Governing Harvard: A Harvard Magazine Roundtable |url=https://harvardmagazine.com/2006/05/governing-harvard.html |work=Harvard Magazine |date=May–June 2006 |access-date=2020-11-24 |archive-date=2021-04-16 |archive-url=https://web.archive.org/web/20210416101007/https://harvardmagazine.com/2006/05/governing-harvard.html |url-status=live }}</ref> Nowadays, corporations in most jurisdictions have a distinct name that does not need to make reference to the members of their boards. In Canada, this possibility is taken to its logical extreme: many smaller Canadian corporations have no names at all, merely numbers based on a registration number (for example, "12345678 Ontario Limited"), which is assigned by the provincial or territorial government where the corporation incorporates.

In most countries, corporate names include a term or an abbreviation that denotes the corporate status of the entity (for example, "Incorporated" or "Inc." in the United States) or the limited liability of its members (for example, "Limited", "Ltd.", or "LLC").<ref name="Bartlett_Page54">{{cite book |last1=Bartlett |first1=Joseph W. |title=Equity Finance: Venture Capital, Buyouts, Restructurings and Reorganizations |date=1995 |publisher=Aspen Publishers |location=New York |isbn=978-07355-7077-1 |page=54 |edition=2nd |url=https://books.google.com/books?id=j5ngCEGebrwC&pg=PA54 |access-date=22 October 2020}}</ref><ref name="LoPucki_Page_58">{{cite book |last1=LoPucki |first1=Lynn M. |last2=Verstein |first2=Andrew |author1-link=Lynn M. LoPucki |title=Business Associations: A Systems Approach |edition=2nd |date=2024 |publisher=Aspen Publishing |location=Burlington, Massachusetts |isbn=9798892073653 |page=58 |url=https://books.google.com/books?id=UMIG0QEACAAJ&pg=PA58 |access-date=November 15, 2024}}</ref>  These terms vary by jurisdiction and language. In some jurisdictions, they are mandatory, and in others, such as California, they are not.<ref name="LoPucki_Page_58" /><ref>California does not require corporations to indicate corporate status in their names, except for close corporations. The drafters of the 1977 revision of the California General Corporation Law considered the possibility of forcing all California corporations to have a name indicating corporate status, but decided against it because of the huge number of corporations that would have had to change their names, and the lack of any evidence that anyone had been harmed in California by entities whose corporate status was not immediately apparent from their names. However, the 1977 drafters were able to impose the current disclosure requirement for close corporations. See Harold Marsh, Jr., R. Roy Finkle, Larry W. Sonsini, and Ann Yvonne Walker, [https://books.google.com/books?id=uVKArsf8CtIC&pg=SA5-PA15 ''Marsh's California Corporation Law''], 4th ed., vol. 1 (New York: Aspen Publishers, 2004), 5–15 — 5–16.</ref> Their use puts everybody on [[constructive notice]] that they are dealing with an entity whose [[legal liability|liability]] is limited: one can only collect from whatever assets the entity still controls when one obtains a judgment against it.

Corporate names are supposed to be unique to the jurisdiction in which the corporation is registered.<ref name="LoPucki_Page_59">{{cite book |last1=LoPucki |first1=Lynn M. |last2=Verstein |first2=Andrew |author1-link=Lynn M. LoPucki |title=Business Associations: A Systems Approach |edition=2nd |date=2024 |publisher=Aspen Publishing |location=Burlington, Massachusetts |isbn=9798892073653 |page=59 |url=https://books.google.com/books?id=UMIG0QEACAAJ&pg=PA59 |access-date=November 15, 2024}}</ref>   Governments will not allow another corporation or any other kind of legal entity to register a name that is too similar to the name of an existing corporation.<ref name="LoPucki_Page_59"/> However, since "different states may register entities with the same names, a corporate name is a unique identifier only when combined with the name of the state of incorporation".<ref name="LoPucki_Page_59"/>  This explains why lawyers in legal papers often expressly refer to a corporation's state of incorporation after the first mention of its name.<ref name="LoPucki_Page_59"/>

Some jurisdictions do not allow the use of the word "'''company'''" alone to denote corporate status, since the word "[[company]]" may refer to a partnership or some other form of collective ownership (in the United States it can be used by a [[sole proprietorship]] but this is not generally the case elsewhere).{{citation needed|date=August 2012}}

== Personhood ==
{{main|Corporate personhood}}
Despite not being human beings, corporations have been ruled [[Legal personality|legal persons]] in a few countries, and have many of the same rights as  [[natural person]]s do. For example, a corporation can own property, and can sue or be sued for as long as it exists. Corporations can exercise [[human rights]] against real individuals and the state,<ref>{{cite book |title=The Human Rights of Companies: Exploring the Structure of ECHR Protection |first1=Marius |last1=Emberland |publisher=Oxford University Press |year=2006 |isbn=978-0-19-928983-7 |page=1 |url=http://fds.oup.com/www.oup.co.uk/pdf/0-19-928983-2.pdf |access-date=2 June 2012 |archive-url=https://web.archive.org/web/20120617104051/http://fds.oup.com/www.oup.co.uk/pdf/0-19-928983-2.pdf |archive-date=17 June 2012 |url-status=dead |df=dmy-all }}</ref><ref>e.g. [[South African Constitution]] Sect.8, especially Art.(4)</ref> and they can themselves be responsible for human rights violations.<ref>Phillip I. Blumberg, The Multinational Challenge to Corporation Law: The Search for a New Corporate Personality, (1993) discusses the controversial nature of additional rights being granted to corporations.</ref> Corporations can be "dissolved" either by statutory operation, the order of the court, or voluntary action on the part of shareholders. [[Insolvency]] may result in a form of corporate failure, when creditors force the liquidation and dissolution of the corporation under court order,<ref>See, for example, the Business Corporations Act (B.C.) [SBC 2002] chapter 57, Part 10</ref> but it most often results in a restructuring of corporate holdings. Corporations can even be convicted of special criminal offenses in the UK, such as [[fraud]] and [[corporate manslaughter]]. However, corporations are not considered living entities in the way that humans are.<ref>e.g. [[Corporate Manslaughter and Corporate Homicide Act 2007]]</ref>

Legal scholars and others, such as [[Joel Bakan]], have observed that a business corporation created as a "legal person" has a [[psychopathy|psychopathic personality]] because it is required to elevate its own interests above those of others even when this [[externality|inflicts major risks and grave harms]] on the public or on other third-parties. Such critics note that the legal mandate of the corporation to focus exclusively on corporate profits and self-interest often victimizes employees, customers, the public at large, and/or the [[environmental economics|natural resources]].<ref>Joel Bakan, [https://www.simonandschuster.com/books/The-Corporation/Joel-Bakan/9780743247467 "The Corporation: The Pathological Pursuit of Profit and Power"] {{Webarchive|url=https://web.archive.org/web/20210730014716/https://www.simonandschuster.com/books/The-Corporation/Joel-Bakan/9780743247467 |date=2021-07-30 }} (New York: The Free Press, 2004)</ref> The political theorist [[David Runciman]] notes that corporate personhood forms a fundamental part of the 21st century conception of the [[state (polity)|state]], and believes the idea of the corporation as a legal person can help to clarify the role of citizens as political [[Stakeholder (corporate)|stakeholders]], and to break down the sharp conceptual dichotomy between the state and the people or the individual, a distinction that, in his account, is "increasingly unable to meet the demands placed on the state in the modern world".<ref>{{cite journal|last=Runciman|first=David|author-link=David Runciman|year=2000|title=Is the State a Corporation?|journal=Government and Opposition|volume=35|number=1|pages=90, 103–104|doi=10.1111/1477-7053.00014|s2cid=143599471}}</ref>

== See also ==
{{Columns-list|colwidth=30em|
'''Law'''
* [[Commercial law]]
* [[United States corporate law]]
* [[Canadian corporate law]]
* [[European corporate law]]
* [[German company law]]
* [[History of company law in the United Kingdom]]
* [[United Kingdom company law]]

'''Other'''
* [[Anti-corporate activism]]
* [[Business attire]]
* [[Blocker corporation]]
* [[Body politic]]
* [[Co-determination]]
** [[Worker representation on corporate boards of directors]]
* [[Community interest company]]
* [[Cooperative]]
* [[Corporate crime]]
* [[Corporate finance]]
* [[Corporate governance]]
* [[Corporate group]]
* [[Corporate haven]]
* [[Corporate propaganda]]
* [[Corporate warfare]]
* [[Corporate welfare]]
* [[Corporation sole]]
* [[Corporatism]]
* [[Corporatization]]
* [[Decentralized autonomous organization]]
* [[Evil corporation]]
* [[Good standing]]
* [[State-owned enterprise|Government-owned corporation]]
* [[History of competition law]]
* [[Incorporation (business)]]
* [[Limited liability company]]
* [[Living wage]]
* [[Megacorporation]]
* [[Multinational corporation]]
* [[Nationalization]]
* [[Nonprofit corporation]]
* [[Organizational culture]]
* [[Preferred stock]]
* [[Privatization]]
* [[Professional corporation]] (PC or P.C.)
* [[Public limited company]] (PLC)
* [[Shelf corporation]]
* [[Small business]]
* [[South Sea Company]]
* [[Tulip mania]]
* [[United States antitrust law]]
* [[Unlimited company]]
* [[Unlimited liability corporation]]
}}

== Notes ==
{{Notelist}}

== References ==
{{Reflist}}

== Further reading ==
* {{cite book |last1=Barnet |first1=Richard  |last2=Muller |first2=Ronald E. |title=Global Reach: The Power of the Multinational Corporation |url=https://archive.org/details/globalreachpower00barn |url-access=registration |publisher=Simon & Schuster |year=1974 |location=New York}}
* Bakan, Joel. ''The New Corporation: How "Good" Corporations Are Bad for Democracy''. (2020)
* Blackstone, W. ''Commentaries on the Laws of England'' (1765) 455–473
* Blumberg, Phillip I., ''The Multinational Challenge to Corporation Law: The Search for a New Corporate Personality'', (1993)
* Blumberg, PI, ''The Multinational Challenge to Corporation Law'' (1993)
* Bromberg, Alan R. ''Crane and Bromberg on Partnership''. 1968.
* Brown, Bruce. [http://www.astonisher.com/archives/corporation/corporation_intro.html ''The History of the Corporation''] (2003)
* Cadman, John William. ''The Corporation in New Jersey: Business and Politics'' (1949)
* Conard, Alfred F. ''Corporations in Perspective''. 1976.
* Cooke, C.A., ''Corporation, Trust and Company: A Legal History'', (1950)
* Davies, PL, and LCB Gower, ''Principles of Modern Company Law'' (6th ed., Sweet and Maxwell, 1997), chapters 2–4
* Davis, John P. [http://socserv2.mcmaster.ca/~econ/ugcm/3ll3/davisjohn/index.html ''Corporations''] {{Webarchive|url=https://web.archive.org/web/20110611003708/http://socserv2.mcmaster.ca/~econ/ugcm/3ll3/davisjohn/index.html |date=2011-06-11 }} (1904)
* Davis, Joseph S. [http://socserv2.mcmaster.ca/~econ/ugcm/3ll3/davisjoe/index.html ''Essays in the Earlier History of American Corporations''] {{Webarchive|url=https://web.archive.org/web/20110610214651/http://socserv2.mcmaster.ca/~econ/ugcm/3ll3/davisjoe/index.html |date=2011-06-10 }} (1917)
* Dignam, Alan and John Lowry (2020), ''Company Law'', [[Oxford University Press]] {{ISBN|978-0-19-928936-3}}
* Dodd, Edwin Merrick. ''American Business Corporations Until 1860, with Special Reference to Massachusetts'' (1954)
* DuBois, A. B. ''The English Business Company after the Bubble Act'' (1938)
* Formoy, RR, ''The Historical Foundations of Company Law'' (Sweet and Maxwell 1923) 21
* Freedman, Charles. ''Joint-stock Enterprise in France: From Privileged Company to Modern Corporation'' (1979)
* Frentrop, P, ''A History of Corporate Governance 1602–2002'' (Brussels et al., 2003)
* [[Ernst Freund|Freund, Ernst]]. [https://web.archive.org/web/20050129193644/http://socserv2.mcmaster.ca/~econ/ugcm/3ll3/freund/index.html ''The Legal Nature of the Corporation''] (1897), MCMaster.ca
* Hallis, Frederick. ''Corporate Personality: A Study in Jurisprudence'' (1930)
* [[Robert Hessen|Hessen, Robert]]. ''[[In Defense of the Corporation]]''. Hoover Institute. 1979.
* Hunt, Bishop. ''The Development of the Business Corporation in England '' (1936)
* Klein and Coffee. ''Business Organization and Finance: Legal and Economic Principles''. Foundation. 2002.
* Kocaoglu, Kagan (Cahn Kojaolu) [https://ssrn.com/abstract=1103644 A Comparative Bibliography: Regulatory Competition on Corporate Law]
* Kyd, S, ''A Treatise on the Law of Corporations'' (1793–1794)
* Mahoney, PG, "Contract or Concession? An Essay on the History of Corporate Law" (2000) 34 Ga. Law Review 873
* Majumdar, Ramesh Chandra. [http://socserv2.mcmaster.ca/~econ/ugcm/3ll3/majumdar/index.html ''Corporate Life in Ancient India''] {{Webarchive|url=https://web.archive.org/web/20110706185250/http://socserv2.mcmaster.ca/~econ/ugcm/3ll3/majumdar/index.html |date=2011-07-06 }}, (1920)
* Means, Robert Charles. ''Underdevelopment and the Development of Law: Corporations and Corporation Law in Nineteenth-century Colombia'', (1980)
* Micklethwait, John and Wooldridge, Adrian. ''The Company: A Short History of a Revolutionary Idea''. New York: Modern Library. 2003.
* {{cite book |last1= Provost|first1=Claire|last2=Kennard |first2=Matt |author-link2=Matt Kennard (journalist)|date=2023 |title=Silent Coup: How Corporations Overthrew Democracy|url= |location= |publisher=Bloomsbury Academic|page= |isbn=978-1350269989}}
* Owen, Thomas. ''The Corporation Under Russian Law: A Study in Tsarist Economic Policy'' (1991)
* Rungta, Radhe Shyam. ''The Rise of the Business Corporation in India, 1851–1900'' (1970)
* Scott, W. R. [http://socserv2.mcmaster.ca/~econ/ugcm/3ll3/scott/index.html ''Constitution and Finance of English, Scottish and Irish Joint-Stock Companies to 1720''] {{Webarchive|url=https://web.archive.org/web/20110706185257/http://socserv2.mcmaster.ca/~econ/ugcm/3ll3/scott/index.html |date=2011-07-06 }} (1912)
* [[Robert Sobel|Sobel, Robert]]. ''The Age of Giant Corporations: A Microeconomic History of American Business''. (1984)
* [[Adam Tooze|Tooze, Adam]], "Democracy and Its Discontents", ''[[The New York Review of Books]]'', vol. LXVI, no. 10 (6 June 2019), pp.&nbsp;52–53, 56–57.  "Democracy has no clear answer for the mindless operation of [[bureaucracy|bureaucratic]] and [[technology|technological power]].  We may indeed be witnessing its extension in the form of [[artificial intelligence]] and [[robotics]].  Likewise, after decades of dire warning, the [[environmentalism|environmental problem]] remains fundamentally unaddressed.... Bureaucratic overreach and environmental catastrophe are precisely the kinds of slow-moving existential challenges that democracies deal with very badly.... Finally, there is the threat du jour: corporations and the technologies they promote."  (pp.&nbsp;56–57.)

== External links ==
{{wikiquote|Corporations}}
* [[b:US Corporate Law|US Corporate Law]] at Wikibooks
* [http://www.brh.org.uk/dwtf2008/kcc.html Audio from a talk about the history of corporations and English law by barrister Daniel Bennett]

{{Aspects of corporations}}
{{Workplace}}
{{Portal bar|Companies}}

{{Authority control}}

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