Corporation Law [Final]

8/14/2019 Corporation Law [Final]

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What is a Corporation?

A corporation is an artificial being created byoperation of law, having the right of succession and

the powers, attributes and properties expressly

authorized by law or incident to its existence. (Sec. 2,

Corporation Code)

"It is an artificial being, invisible, intangible and

existing only in contemplation of law.


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Collection of many individuals

Special denomination

Perpetual succession

Vested by the Policy of Law

Law treats it as thought were a person by process of

fiction

Artificial person distinct and separate from its

individual stock holders


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Roman Times

Stretches back to Roman times.

Corporations were solely able to be establishedthrough an act of the state (ex. Act of Parliament)

Corporation

Corpus: body of people

Justinian (527565): Roman Law recognized a range ofcorporate entities under the names universitas, corpusor collegium.


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Roman Times

To sue and be sued

Perform legal acts through representatives


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Medieval Times

Churches

Local Governments

Business through common law constructs

Partnerships


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The First Corporations

Europe

Not-for-profit entities

Build institutions for the public good.

Duties overseen by the government


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17thCentury

Money became a major focus of corporations.

Used to fund colonial expansions.

East India Company

British

Royal Charter of 1600

Ruled over a fifth of the world's population with a

private army of a quarter of a million.


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DUTCH EAST

INDIA COMPANY


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Verenigde Oostindische Compagnie or VOC

Trade, exploration, colonization

1602-1800Monopoly: spice trade

Semi-governmental powers: wars, prosecution, treaty

negotiation, colonies


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HISTORY AND GROWTH

16TH

Century spice trade in Europe

Portugese dominationdecline of supplyincrease

in prices

Portugal and Spain united in 1580

Dutch entered the industry (ongoing war between

Portugal and Spain)


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HISTORY AND GROWTH

1598- Dutch trading ships

1599- Jacob van Necks fleetSpice Islands

(Moluccas of Indonesia)

1602- creation of United East Indies Company (Dutch

East Indies Company)

Purpose: stabilize profits in Dutch spice trade and form

monopoly

Powers: build forts, keep armies, make treaties


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HISTORY AND GROWTH

1620sfurther colonization of Indonesian islands and

presence of Dutch plantations growing cloves and

nutmeg

Gold & silvertrade surplus with European countries


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HISTORY AND GROWTH

1652- Cape of Good Hope Southern Africasupplies

to ships sailing to eastern Asia Cape Colony

Trading posts: Persia, Bengal, Malacca, Siam, Formosa,

Malabar


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DECLINE

Asian spices

1666 - loss of silk trade with China

1670 - decrease in trading with Japan

1780war in Englandfinancial troubles

18thCenturydecline of demand of Asian spices

Companys survival due to Dutch govt support


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DECLINE

Charter was renewed by Dutch Government

Companys power reduced

Employee and headquarters reduction


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ORGANIZATION

Complex organizational structure

2 Types of Shareholders

Participantennon-managing partners

Bewindhebbersmanaging partners


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ORGANIZATION

6 Chambers

Amsterdam

Delft

Rotterdam

Enkhuizen

Middleburg

Hoorn


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Importance

Complex business modeltodays businesses

Early form of limited-liability company

Highly organized

First to establish to monopoly over spice trade

Worlds first multinational corporation

Expanded European ideas and technology

Brought ideas & technology to Asia


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Hudsons Bay CompanyFrench: Company de la Baie d Hu

- commonly referred to as The Bay one of the oldestcommercial corporations in the world

- fur trading business

- incorporated by English Royal Charter in 1670 as TheGovernor and Company of Adventures of England trading intoHudsons Bay


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c. British East IndiaCompany

- originally chartered as the Governor and Company ofMerchant of London Trading into the East Indies in 1600,more properly called the Honourable East India Company.

- it first entered the spice trade in the form of an earlycapitalist venture

- the grandest society of merchants in the universe


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- During its heyday, the EIC did not only establishedtrade through Asia and the Middles East but also

effectively became the ruler of territories vastly larger

than the United Kingdom itself.


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d. South Sea Company

- a British joint-stock company founded in 1711

-encouraged the fishing business

-officially The Governor and Company of the

merchants of Great Britain

-


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e. British South AfricaCompany

- Originally completed to exploit the expected mineralwealth of Mashonaland

- Received a Royal Charter in 1889 modelled on that of

the British East India Company.


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American Revolution

The American Revolutionary War began in 1776 to overthrow Britishcolonisation


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Ending colonial monopoly

After Independence, American corporations, like theBritish companies before them, were chartered to perform

specific public functions

Britain protected its textile industry and forced the Indianmarket open.


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RISE OF PRIVATEECONOMY

- result of classical liberalism and laissez faireeconomic theory due to a resolution in economiesled by Adam Smith

- Laissez-faire (let them do, let it be)

- In 1776, Adam Smith wrote the Wealth of Nations


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Corporate personhood

Joint Stock Companies Act of 1844

Limited Liability Act of 1855

* a corporation is a natural person under the law.

* no state shall deprive any person of life, liberty or property adopted to protectemancipated slaves in the hostile South-was used ton defend corporations and strikedown regulations.


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Free Trade

*unchecked capitalism

*In US, antitrust laws to break monopolies were brought

it.


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Rise of Private Economy

Result of classical liberalism and laissez faireeconomic theory. (Adam Smith)

Transition from government/guild affiliated entities to

public and private economic entities.

United States

mid-19thcentury

focused on protection of the public interest.


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Corporate charters were closely regulated by thestates.

Act of legislation was needed.

Greater corporate registration revenues available byproviding more permissive corporate laws.

New Jersey was the first state to adopt an "enabling"corporate law followed by Delaware.

1819, the U. S. Supreme Court granted corporationsa plethora of rights.


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Corporation as an "artificial person", possessing bothindividuality and immortality.

Joint Companies Act 1844

Limited Liability Act of 1855

Corporate Personhood

1844: Act in Britain allowing them to define their ownpurpose.


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1855: shareholders were awarded limited liability.1886: landmark decision by a US court recognized thecorporation as a 'natural person' under law.

The 14th amendment to the Constitution: 'no state shalldeprive any person of life, liberty or property

Free Trade

Antitrust Laws in the US

Taxation and tariffs were raised

State regulation crept in


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State Intervention

Welfare States: labor movement, 1930s depression,World War II.

Post - WWII: independence in former Western

colonies

Aggressive protection of domestic industry.

Foreign Investment Restrictions


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State Intervention

1950 - 1980: Economic Orthodoxy

1960: Social activism in the US

Environmental and labor standards

Neoliberal Era

1970: Milton Friedman and the Chicago School

Ultra free-market ideas based on deregulation andprivatization that harked back to the laissez-faire capitalism ofthe 19th century (hence the term 'neoliberalism')


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State Intervention

1980: fought to regain control of both political agendaand the court system.

1982 Debt Crisis:

US its chance to dominate the world economy

rich nations to re-subordinate the global South through'structural adjustment' via the World Bank and the

International Monetary Fund.


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State Intervention

Globalization:

The power of transnational corporations is greater than

that of many nation-states.

NAFTA

WTO


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Ownership and Control

Formation:

Historically, corporations were created by a charter

granted by government.

At present, corporations are usually registered with the

State, province or national government and regulatedby the laws enacted by that government.

A corporation files articles of incorporation


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Ownership and Control

Nature of the corporationAmount of stock it is authorized to use

Names and addresses of the directors

Once the articles are approved, directors make the bylaws.

Naming

Have a distinct name


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Dartmouth College vs.Woodland

Landmark decision from the United States Supreme CourtApplication of the Contract Clause of the United StatesConstitution to private corporations.

The case arose when the president of Dartmouth College wasdeposed by its trustees.

Attempted to force the college to become a public institutionand thereby place the ability to appoint trustees in the hands ofthe governor.

The Supreme Court upheld the sanctity of the original charter ofthe college, which pre-dated the creation of the State.


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Concession Theory

Incorporation is a state-conferred privilegeNOTpurely private contracting

Came about during the early history of corporations, whencorporations were created by special charter

Tayag vs. Benguet Consolidated, Inc.

A corporation owes its life to the State

A corporation cannot exist without the imprimatur of the State actingaccording to law


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Enterprise entity theory

Legal fiction alone does notcreate a corporateentity; corporation takes its being from the reality ofthe underlying enterprise

When the entity is challenged in some way, itsexistence, extent and consequences may bedetermined by the actual existence and operationsof the underlying enterprise


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Enterprise entity theory

Partnership personality becomes reality when two ormore persons decide to contribute money, property orindustry to a common fund with the intention to divideprofits

Meant to cover situations where courts either erectedcorporate personality which the State had not granted, ordisregarded corporate personality where the State hadgranted it

Corporation Law [Final]

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Transcript of Corporation Law [Final]