18: Corporations
- Page ID
- 41878
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\(\newcommand{\avec}{\mathbf a}\) \(\newcommand{\bvec}{\mathbf b}\) \(\newcommand{\cvec}{\mathbf c}\) \(\newcommand{\dvec}{\mathbf d}\) \(\newcommand{\dtil}{\widetilde{\mathbf d}}\) \(\newcommand{\evec}{\mathbf e}\) \(\newcommand{\fvec}{\mathbf f}\) \(\newcommand{\nvec}{\mathbf n}\) \(\newcommand{\pvec}{\mathbf p}\) \(\newcommand{\qvec}{\mathbf q}\) \(\newcommand{\svec}{\mathbf s}\) \(\newcommand{\tvec}{\mathbf t}\) \(\newcommand{\uvec}{\mathbf u}\) \(\newcommand{\vvec}{\mathbf v}\) \(\newcommand{\wvec}{\mathbf w}\) \(\newcommand{\xvec}{\mathbf x}\) \(\newcommand{\yvec}{\mathbf y}\) \(\newcommand{\zvec}{\mathbf z}\) \(\newcommand{\rvec}{\mathbf r}\) \(\newcommand{\mvec}{\mathbf m}\) \(\newcommand{\zerovec}{\mathbf 0}\) \(\newcommand{\onevec}{\mathbf 1}\) \(\newcommand{\real}{\mathbb R}\) \(\newcommand{\twovec}[2]{\left[\begin{array}{r}#1 \\ #2 \end{array}\right]}\) \(\newcommand{\ctwovec}[2]{\left[\begin{array}{c}#1 \\ #2 \end{array}\right]}\) \(\newcommand{\threevec}[3]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \end{array}\right]}\) \(\newcommand{\cthreevec}[3]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \end{array}\right]}\) \(\newcommand{\fourvec}[4]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \\ #4 \end{array}\right]}\) \(\newcommand{\cfourvec}[4]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \\ #4 \end{array}\right]}\) \(\newcommand{\fivevec}[5]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \\ #4 \\ #5 \\ \end{array}\right]}\) \(\newcommand{\cfivevec}[5]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \\ #4 \\ #5 \\ \end{array}\right]}\) \(\newcommand{\mattwo}[4]{\left[\begin{array}{rr}#1 \amp #2 \\ #3 \amp #4 \\ \end{array}\right]}\) \(\newcommand{\laspan}[1]{\text{Span}\{#1\}}\) \(\newcommand{\bcal}{\cal B}\) \(\newcommand{\ccal}{\cal C}\) \(\newcommand{\scal}{\cal S}\) \(\newcommand{\wcal}{\cal W}\) \(\newcommand{\ecal}{\cal E}\) \(\newcommand{\coords}[2]{\left\{#1\right\}_{#2}}\) \(\newcommand{\gray}[1]{\color{gray}{#1}}\) \(\newcommand{\lgray}[1]{\color{lightgray}{#1}}\) \(\newcommand{\rank}{\operatorname{rank}}\) \(\newcommand{\row}{\text{Row}}\) \(\newcommand{\col}{\text{Col}}\) \(\renewcommand{\row}{\text{Row}}\) \(\newcommand{\nul}{\text{Nul}}\) \(\newcommand{\var}{\text{Var}}\) \(\newcommand{\corr}{\text{corr}}\) \(\newcommand{\len}[1]{\left|#1\right|}\) \(\newcommand{\bbar}{\overline{\bvec}}\) \(\newcommand{\bhat}{\widehat{\bvec}}\) \(\newcommand{\bperp}{\bvec^\perp}\) \(\newcommand{\xhat}{\widehat{\xvec}}\) \(\newcommand{\vhat}{\widehat{\vvec}}\) \(\newcommand{\uhat}{\widehat{\uvec}}\) \(\newcommand{\what}{\widehat{\wvec}}\) \(\newcommand{\Sighat}{\widehat{\Sigma}}\) \(\newcommand{\lt}{<}\) \(\newcommand{\gt}{>}\) \(\newcommand{\amp}{&}\) \(\definecolor{fillinmathshade}{gray}{0.9}\)- Understand how corporations are structured and managed.
- Learn about shareholder rights and the powers and liabilities of corporate officers and directors.
- Learn the legal theories under which limited liability is taken away from corporations.
- Comprehend how corporations merge, consolidate, and dissolve.
- 18.1: Introduction
- This page discusses the significant role of corporations in the US economy, especially in research and development. While not outlined in the Constitution, corporations are viewed as legal persons with rights like equal protection and contract capabilities, supported by Supreme Court rulings. Congress recognizes them as "persons," although they lack some rights, such as the right against self-incrimination.
- 18.2: Corporate Structure
- This page explains that corporations are required by state laws to have at least one director, elected by shareholders, who along with other directors form the Board of Directors. This board is responsible for managing the corporation and overseeing its officers, like the president and CFO, who are in charge of daily operations.
- 18.3: Shareholder Rights
- This page outlines shareholder rights within a corporation, including inspecting financial records, voting on major decisions, attending meetings, and having preemptive purchase rights. Shareholders can also file derivative suits if necessary. Dividends are declared at the board's discretion, allowing for profit reinvestment. Ultimately, these rights aim to protect shareholders while maintaining corporate privacy.
- 18.4: Corporate Officer and Directors
- This page explains the roles and responsibilities of corporate officers and directors, who manage day-to-day operations on behalf of shareholders. They have a fiduciary duty that includes loyalty and care, requiring them to act in the best interests of both the corporation and shareholders.
- 18.5: Legal Theories
- This page outlines how corporations offer limited liability to shareholders while highlighting exceptions that may lead to personal liability. It discusses the Piercing the Corporate Veil doctrine, which allows courts to overlook the corporation's separate status in cases of misconduct.
- 18.6: Mergers, Consolidations, and Dissolutions
- This page discusses the existence and management of corporations, including their potential to merge, consolidate, or dissolve. Mergers absorb one corporation into another, while consolidation creates a new entity. Both require shareholder approval and adhere to antitrust laws. Voluntary dissolution happens with shareholder consent, while involuntary dissolution may result from state actions due to failures. Additionally, shareholder-requested dissolution can occur due to deadlock or misconduct.
- 18.7: Concluding Thoughts
- This page discusses the structure of corporations as separate legal entities owned by shareholders and managed by directors and officers, providing limited liability to shareholders. Personal liability for shareholders occurs only in cases of fraud or serious misconduct. Directors and officers are protected under the business judgment rule when acting in good faith. Corporations have perpetual existence unless dissolved voluntarily, by the state, or by shareholders or creditors.