Type or paste a DOI name into the text box. Corporations come in many different types but are usually divided by the law of the jurisdiction where they are chartered into two kinds: by whether they can issue stock or not, or by whether they are formed to make a profit or not. Where local law distinguishes corporations by the ability to issue stock, corporations allowed to do so are referred to as “stock corporations”, ownership of the corporation is through stock, and owners of stock are referred to as “stockholders” or “shareholders”. Corporate bond market in india pdf chartered in regions where they are distinguished by whether they are allowed to be for profit or not are referred to as “for profit” and “not-for-profit” corporations, respectively.

A for-profit corporation is almost always a stock corporation, but some for-profit corporations may choose to be non-stock. Registered corporations have legal personality and are owned by shareholders whose liability is generally limited to their investment. In American English, the word corporation is most often used to describe large business corporations. Despite not being individual human beings, corporations, as far as US law is concerned, are legal persons, and have many of the same rights and responsibilities as natural persons do.

For example, a corporation can own property, and can sue or be sued. Late in the 19th century, a new form of company having the limited liability protections of a corporation, and the more favorable tax treatment of either a sole proprietorship or partnership was developed. While not a corporation, this new type of entity became very attractive as an alternative for corporations not needing to issue stock. 8 share of the Stora Kopparberg mine, dated June 16, 1288. The word “corporation” derives from corpus, the Latin word for body, or a “body of people”. Roman law recognized a range of corporate entities under the names universitas, corpus or collegium. Entities which carried on business and were the subjects of legal rights were found in ancient Rome, and the Maurya Empire in ancient India.

In medieval times, traders would do business through common law constructs, such as partnerships. Whenever people acted together with a view to profit, the law deemed that a partnership arose. Hudson’s Bay Company, which were created to lead the colonial ventures of European nations in the 17th century. 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. 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. Chart of the South Sea Company’s stock prices. The rapid inflation of the stock value in the 1710s led to the Bubble Act 1720, which restricted the establishment of companies without a royal charter.

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. Adam 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. 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.

The process of incorporation was possible only through a royal charter or a private act and was limited, owing to Parliament’s jealous protection of the privileges and advantages thereby granted. Then, in 1843, 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. However, there was still no limited liability and company members could still be held responsible for unlimited losses by the company. 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, Mr.

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. The major error of this judgment was recognised by the same magazine more than 70 years later, when it claimed that, “he economic historian of the future.

The legislation shortly gave way to a railway boom, and from then, the numbers of companies formed soared. In the later nineteenth century, depression took hold, and just as company numbers had boomed, many began to implode and fall into insolvency. Much strong academic, legislative and judicial opinion was opposed to the notion that businessmen could escape accountability for their role in the failing businesses. Lindley LJ was the leading expert on partnerships and company law in the Salomon v. The landmark case confirmed the distinct corporate identity of the company. In 1892, Germany introduced the 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. The last significant development in the history of companies was the 1897 decision of the House of Lords in Salomon v.

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. New Jersey was the first state to adopt an “enabling” corporate law, with the goal of attracting more business to the state, in 1896. The end of the 19th century saw the emergence of holding companies and corporate mergers creating larger corporations with dispersed shareholders.