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in law, organization enjoying legal personality for the purpose of carrying on certain activities. Most corporations are businesses for profit; they are usually organized by three or more subscribers who raise capital for the corporate activities by selling shares of stockstock,
in finance, instrument certifying to shares in the ownership of a corporation. Bonds are similar evidences of shares in a loan to a corporation. Stock yields no dividends until claims of bondholders have been met.
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, which represent ownership and are transferable. Besides business corporations, there are also charitable, cooperative, municipal, and religious corporations, all with distinctive features. In the United States all governmental units smaller than a state (e.g., counties, cities) are municipal corporations. Certain religious functionaries (e.g., Roman Catholic archbishops) legally are corporations sole.

The legal personality of a corporation is symbolized by its seal and its distinctive name. As a legal person, the corporation continues in existence when the organizers lose their connection with it. In most cases its liability is limited to the assets it possesses and creditors may not seize property of persons associated with the corporation as stockholders or otherwise. Legal personality gives the corporation many of the capacities of a natural person; e.g., it can hold property and can even commit crimes (for which it may be fined and its directors imprisoned).

The Modern Corporation

The modern concept of corporate power holds that the rights of the participants as well as the conduct of the enterprise must be the subject of managerial discretion. The salient characteristic of the modern corporation is the separation of management from ownership. Management of industrial corporations now requires executive managers and a corporate bureacracy to oversee its complex and interlacing activities.

The large business corporation has strongly influenced the control of property in the modern world. The large corporations are typically controlled by a small minority of the stockholders. There are several methods employed by small groups of stockholders to gain control of large corporations. These include pooling of the majority of stock in the hands of trustees having the power to vote it and the use of proxies (agents for the actual stockholders pledged to vote for particular candidates for managerial positions). Proxies are generally successfully used because stockholders rarely attend meetings or name proxies other than those suggested to them by management.

A more recent type of corporation is the holding company, organized to buy a controlling interest in other corporations; this type of corporation typically possesses no physical assets. The amount of cash needed to control a concern is lessened by pyramiding holding companies. This is done by creating a company to hold a voting control of one or more operating companies. A third company is created to hold a controlling interest in the second, and so on. The control of the last holding company is sufficient to control all; and such control, because of the scattering of stock among many small holders, may need the ownership of only 10% or 20% of the stock available.

See also trusttrust,
in law, arrangement whereby property legally owned by one person is administered for the benefit of another. Three parties are ordinarily needed for the relation to arise: the settlor, who bequeaths or deeds the property for another's benefit; the trustee, in whose hands
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The Regulation of Corporations

Until 1844 incorporation in England continued to be a matter of special grant by the king or Parliament. New corporations were created in the Industrial Revolution to finance larger economic units, such as railways and steam-driven machinery in factories. In the United States the state legislatures became the chief authorities to grant charters to corporations, although the federal government incorporates in a limited field. Federal charters were granted to both of the Banks of the United States, to certain railroads after the Civil War, and to the Communications Satellite Corporation (Comsat). Corporations owned by the federal government and financed by government appropriations include the Federal Deposit Insurance Corporation, the Community Credit Corporation, and various corporations established to meet emergencies and later liquidated. At first states passed a special act for each incorporation, but in 1811, New York state enacted a general incorporation law enabling the secretary of state to give charters. Since the Dartmouth College CaseDartmouth College Case,
decided by the U.S. Supreme Court in 1819. The legislature of New Hampshire, in 1816, without the consent of the college trustees, amended the charter of 1769 to make Dartmouth College public. The trustees brought suit.
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 of 1819, when a charter was held to be a binding contract between a state and a corporation, unalterable and unamendable by the state without the corporation's consent, fewer perpetual charters have been granted, the right of the legislature to alter or annul being specifically reserved in the charter. Variability in state incorporation laws and the ability of corporations incorporated in one state to do business in all other states have allowed corporations to incorporate in the state or states having the most lenient incorporation laws. In general, the history of corporations in the United States has been marked by the abdication of state control over corporations.


See R. Sobel, The Age of Giant Corporations (1984); J. Davis, Corporations (1905, repr. 1986); W. Doran, The Business Corporation in the Democratic Society (1987); J. Bakan, The Corporation: The Pathological Pursuit of Profit and Power (2004).



(1) In the Middle Ages a widespread form of organization of artisans and merchants (guilds). The Great French Revolution abolished guild corporations, whose monopoly position had hampered the development of the productive forces of capitalist society.

(2) An aggregate of individuals united for the achievement of some goal and forming an independent subject under the law (a juridical person).

The term “corporation” is most common in Anglo-American law. In the USA public corporations are accorded the rights of a juridical person (municipalities, for example, are considered public corporations), as are corporations of lawyers and so on. Private corporations in the USA correspond to joint-stock companies in the countries of Western Europe.

As a form of monopolistic joint-stock association, the corporation has become widespread in the USA as a result of the concentration and centralization of capital. The first corporations sprang up in railroad construction in the middle of the 19th century. By the early 20th century the corporation had become the main form of capitalist enterprise. Under contemporary conditions, corporations hold the key position in all sectors of the US economy: 98 percent of all income in manufacturing, 93 percent of the income in transportation and communication, and 76 percent of the income in domestic commerce. In 1968 the USA had 1,542,000 corporations with total assets of $2,216,-000,000,000, accounting for 83 percent of the income and 67 percent of the profits of all the enterprises of the country. The net profits of corporations reached $86,000,000,000 in 1968, double the 1960 level.


1. a group of people authorized by law to act as a legal personality and having its own powers, duties, and liabilities
2. the municipal authorities of a city or town
References in classic literature ?
Their old father gave each of them a fine horse; the one who knew the dictionary and the daily paper by heart had a black horse, while the other who was so clever at corporation law had a milk- white one.
We have the only original telephone patents," he wrote; "we have organized and introduced the business, and we do not propose to have it taken from us by any corporation.
all that great patch of land with cabbages and sunflowers, which the corporation is just going to run a main street through?
The capital was furnished by himself he, in fact, constituted the company; for, though he had a board of directors, they were merely nominal; the whole business was conducted on his plans and with his resources, but he preferred to do so under the imposing and formidable aspect of a corporation, rather than in his individual name, and his policy was sagacious and effective.
Being, moreover, a director of the railroad corporation and one of its largest stockholders, he had it in his power to give me all desirable information respecting that praiseworthy enterprise.
Whenever a rich old hunks or prodigal heir or bankrupt corporation gets into the notion of putting up a palace, there is no such thing in the world as stopping either of them, and this every intelligent person knows.
You will find him at 126b Corporation Street, where the temporary offices of the company are situated.
The raw afternoon is rawest, and the dense fog is densest, and the muddy streets are muddiest near that leaden-headed old obstruction, appropriate ornament for the threshold of a leaden-headed old corporation, Temple Bar.
Although our productions have afforded more extensive and unaffected pleasure than those of any other literary corporation in the world, no species of composition has been so much decried.
Oh, we won't do that, sir; we'll take all the good eatable parts of it, and, if you'll let me, I'll cut him up just as well as the chairman of the honorable corporation of butchers of the city of London could do.
This was their day, their feast of fools, their saturnalia, the annual orgy of the corporation of Law clerks and of the school.
Then they melted the statue in a furnace, and the Mayor held a meeting of the Corporation to decide what was to be done with the metal.

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