Corporate Law and its Major Characteristics
Corporate law, also known as business law or enterprise company law, governs the rights, conduct, organizations, and businesses. It encompasses legal relations related to corporations, the theory of corporations, the legal entity concept, and the practice of law in this field. Major characteristics include legal personality, limited liability, transferable shares, delegated management, and investor ownership. Different types of companies are defined under corporate law, each with unique features and structures that dictate how they operate and make decisions.
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COR PORAT E LAW (ALSO KN OW N AS BUSIN E SS LAW OR E N T E RPRISE COMPAN Y LAW ) IS G OVE RN IN G T HE RIG HT S, CON D UCT OF PE RSON S, ORG AN IZ AT ION S AN D BUSIN E SSE S. T HE T E RM RE FE RS T O T HE LE G AL RE LAT IN G T O C ORPORAT ION S, T HE ORY OF CORPORAT ION S. LAW T HE OR BOD Y RE LAT ION S, COMPAN IE S, SOME T IME S OF LAW AN D PRACT ICE OF T O LAW T HE OR
T H E M A J O R C H A R A C T E R I S T I C S O F C O R P O R AT E L AW T H E R E C O R P O R AT E L A W : A R E F I V E P R I N C I P L E S T H AT A R E C O M M O N T O 1 . L E G A L P E R S O N A L I T Y C O R P O R AT I O N A S E PA R AT E E N T I T Y. T H AT E N T I T Y C A N U S E T H E A S S E T S A N D S E L L T H E M . C R E D I T O R S A S S E T S B A C K . I N S T E A D , T H E Y F O R M T H E I R O W N E N T I T Y T H AT A C T S O N I T S O W N . O W N E R S P O O L T H E I R R E S O U R C E S I N T O E A S I LY TA K E T H E C A N T 2 . L I M I T E D L I A B I L I T Y W H E N C O R P O R AT I O N S P L A I N T I F F T H E C O R P O R AT I O N S L I M I T E D L I A B I L I T Y A L L O W S O W N E R S T O TA K E R I S K S A N D D I V E R S I F Y T H E I R I N V E S T M E N T S . A C O R P O R AT I O N S U E D , A R E T H E O W N E R S . G E T S T H AT O N LY L I N E . A S S E T S T H E T H E O F I T S T H E A S S E T S G O O N A F T E R P E R S O N A L A C A N T C O R P O R AT I O N S
3 . T R A N S F E R R A B L E S H A R E S I F A N O W N E R D E C I D E S T H E Y N O L O N G E R W A N T A S H A R E I N T H E C O R P O R AT I O N , T H E C O R P O R AT I O N D O E S N T H AV E T O S H U T D O W N . O N E O F T H E U N I Q U E F E AT U R E S O F A C O R P O R AT I O N I S T H AT O W N E R S C A N T R A N S F E R S H A R E S W I T H O U T T H E S A M E D I F F I C U LT I E S A N D H A S S L E S T H AT C O M E W I T H T R A N S F E R R I N G O W N E R S H I P O F A PA R T N E R S H I P. T H E R E C A N B E L I M I T S O N H O W S H A R E H O L D E R S T R A N S F E R O W N E R S H I P, B U T T H E FA C T T H AT O W N E R S H I P C A N B E T R A N S F E R R E D A L L O W S T H E C O R P O R AT I O N T O G O O N W H E N O W N E R S W A N T T O M A K E C H A N G E S .
4 . D E L E G A T E D M A N A G E M E N T C O R P O R A T I O N S H A V E A D E F I N E D S T R U C T U R E F O R H O W T H E Y B O A R D O F D I R E C T O R S A N D C O N D U C T T H E I R A F F A I R S . T H E R E S A O F F I C E R S . T H E S E G R O U P S S H A R E A N D S P L I T D E C I S I O N - M A K I N G A U T H O R I T Y. B O A R D M E M B E R S H I R E A N D M O N I T O R O F F I C E R S . T H E Y A L S O R A T I F Y T H E I R M A J O R D E C I S I O N S . T H E S H A R E H O L D E R S E L E C T T H E B O A R D . 5 . I N V E S T O R O W N E R S H I P O W N E R S H AV E A S AY I N M A K I N G D E C I S I O N S F O R T H E C O R P O R AT I O N , B U T T H E Y D O N T D I R E C T LY R U N T H E C O M PA N Y. I N V E S T O R S A L S O H AV E T H E R I G H T T O T H E C O R P O R AT I O N S P R O F I T S . U S U A L LY, A N O W N E R H A S D E C I S I O N - M A K I N G A U T H O R I T Y A N D P R O F I T S H A R I N G I N P R O P O R T I O N T O T H E I R O W N E R S H I P I N T E R E S T. O W N E R S T Y P I C A L LY V O T E T O E L E C T B O A R D M E M B E R S .
