Corporate-Law Framework

A Corporate-Law Framework is a private law framework that governs the corporate lifecycle (including formation, operation, governance, and dissolution) of corporations, regulating the legal rights and legal conduct of corporations and their corporation stakeholders (such as shareholders, directors, and corporate officers).

• AKA: Company Law Framework, Business Organizations Law System, Business Law.
• Context:
  • It can (typically) oversee how Corporate Stakeholders (corporations, investors, shareholders, directors, employees, creditors, consumers and the environment) associate with each other.
  • It can (typically) guide the Corporate Formation, Corporate Funding, Corporate Governance, and Corporate Dissolution.
  • ...
  • It can (typically) be composed of Corporate Law Components (body of law components), such as:
    • Corporate Law Areas (major subdivisions of corporate law focusing on specific aspects), such as:
      • Corporate Formation Law, rules for creating and registering corporations.
      • Corporate Governance Law, regulations on company management and control.
      • Securities Law, rules governing issuance and trading of corporate securities.
      • Mergers and Acquisitions Law, regulations on corporate combinations and takeovers.
      • Shareholder Rights Law, protections for owners of corporate shares.
      • Corporate Finance Law, rules on raising and managing corporate capital.
      • Corporate Insolvency Law, regulations on corporate bankruptcy and restructuring.
      • Corporate Social Responsibility Law, rules on corporate ethical and social obligations.
      • Corporate Compliance Law, regulations ensuring adherence to legal and ethical standards.
      • International Corporate Law, rules governing multinational corporations.
      • ...
    • Corporate Law Principles (fundamental legal propositions guiding corporate law interpretation and corporate law application), such as:
      • Separate Legal Personality Principle, corporation as distinct legal entity.
      • Limited Liability Principle, shareholders' risk limited to investment.
      • Fiduciary Duty Principle, directors' obligation to act in company's best interest.
      • Majority Rule Principle, decisions made by majority shareholder vote.
      • Corporate Transparency Principle, requirement for disclosure of corporate information.
      • ...
    • Corporate Law Doctrines (legal doctrines guiding corporate law interpretation and corporate law enforcement), such as:
      • Business Judgment Rule, presumption of directors' good faith decision-making.
      • Piercing the Corporate Veil Doctrine, circumstances for disregarding corporate entity.
      • Ultra Vires Doctrine, actions beyond corporation's legal powers.
      • Minority Shareholder Protection Doctrine, safeguards for non-controlling shareholders.
      • Corporate Opportunity Doctrine, restrictions on personal benefit from corporate opportunities.
      • ...
    • Corporate Rights and Corporate Obligations (specific entitlements and duties under corporate law), such as:
      • Right to Sue and Be Sued, corporation's legal standing.
      • Right to Enter Contracts, corporation's ability to form agreements.
      • Obligation to Maintain Records, duty to keep corporate documents.
      • Obligation to Pay Taxes, corporate tax responsibilities.
      • Duty of Care, directors' obligation to act prudently.
      • ...
    • Corporate Law Remedies (legal recourse in corporate disputes), such as:
      • Derivative Action, lawsuit by shareholders on behalf of corporation.
      • Appraisal Rights, right to fair value assessment in certain transactions.
      • Injunctive Relief in Corporate Law, court orders to prevent corporate actions.
      • Corporate Dissolution, termination of corporate existence.
      • Shareholder Oppression Remedies, protection for minority shareholders.
      • ...
    • ...
  • It can (typically) vary between jurisdictions, reflecting different business cultures and economic policies.
  • It can (often) evolve in response to changing market conditions and corporate scandals.
  • It can (often) involve Corporate Law Considerations such as mergers and acquisitions law, corporate finance law, and corporate governance law.
  • It can (often) interact with other Areas of Private Law, such as Contract Law, Securities Law, and Tax Law.
  • ...
  • It can be influenced by external factors like competition law, financial law, and anti-bribery regulations.
  • It can shape how a Corporation interacts with capital markets, stock exchanges, and its board of directors.
  • It can be referenced by a Corporate Law Resource, such as a corporate law resource website.
  • It can focus on balancing corporate efficiency with stakeholder protection.
  • It can be influenced by both Common Law and Civil Law traditions.
  • It can involve Statutory Law, Case Law, and Regulatory Rules.
  • It can include principles of Corporate Governance and Shareholder Democracy.
  • It can be subject to Securities Regulation and Antitrust Law considerations.
  • It can be shaped by Judicial Interpretation and Regulatory Oversight.
  • It can regulate various types of corporations (public, private, non-profit).
  • ...
• Example(s):
  • U.S. Corporate Laws, such as:
    • U.S. Corporate Law in 1811 after New York's General Incorporation Statute.
    • U.S. Corporate Law in 1933 after the passage of the Securities Act of 1933.
    • U.S. Corporate Law in 2002 after the enactment of the Sarbanes-Oxley Act.
  • U.K. Corporate Laws, such as:
    • U.K. Corporate Law in 1844 after the Joint Stock Companies Act 1844.
    • U.K. Corporate Law in 1856 after the Joint Stock Companies Act 1856 introducing limited liability.
    • U.K. Corporate Law in 2006 after the passage of the Companies Act 2006.
  • German Corporate Laws, such as:
    • German Corporate Law in 1892 after the Limited Liability Company Act (GmbHG).
    • German Corporate Law in 1965 after the Stock Corporation Act (AktG).
  • Japan Corporate Laws, such as:
    • Japan Corporate Law in 1899 after the enactment of Japan's Commercial Code (influenced by German and French commercial law).
    • Japan Corporate Law in 2005 after the enactment of the Companies Act (simplifying company types and introducing more flexibility for governance structures).
    • Japan Corporate Law in 2015 after amendments to the Companies Act (requiring large companies to appoint outside directors and increasing disclosure requirements).
  • …
• Counter-Example(s):
  • Family Law, which addresses domestic relations and family-related issues rather than corporate affairs.
  • Environmental Law, which regulates the protection of natural resources and environmental standards, not corporate governance.
  • Criminal Law, which deals with offenses against the state or society rather than private corporate transactions.
  • Common Law, which refers to a legal system based on judicial precedents rather than statutory rules specific to corporations.
  • Commercial Law, which focuses on business transactions and trade, distinct from the governance of corporations.
  • Partnership Law, which governs unincorporated business associations rather than incorporated entities like corporations.
  • Sole Proprietorship Law, which applies to businesses owned and operated by individuals rather than corporate entities.
  • Non-Profit Organization Law, which regulates organizations that aim to serve public purposes or social purposes without profit motives.
  • Public Administrative Law, which governs the operations of government agencies rather than private corporations.
  • Employment Law, which focuses on employer-employee relationships and labor issues rather than corporate structure and corporate governance.
• See: Agency Problem, Business Judgment Rule, Corporate Finance, Corporate Social Responsibility, Delegated Management, Fiduciary Duty, Governance Framework, Limited Liability, Shareholder Rights.

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References

2024

• LLM]
  • Corporate Formation and Structure: Corporate law provides the framework for forming and structuring corporations, including the incorporation process and legal personality.
  • Governance Principles: It defines governance structures, such as board of directors and shareholder rights, to ensure transparency and accountability.
  • Fiduciary Duties: Directors and officers are bound by fiduciary duties to act in the best interests of the corporation.
  • Shareholder Rights: Corporate law protects shareholders through voting rights, information access, and the ability to participate in meetings.
  • Private Transactions: It facilitates private ordering, allowing corporations and stakeholders to customize corporate arrangements.
  • Securities and Finance: Corporate law governs the issuance, transfer, and regulation of shares and securities, especially for publicly-traded companies.
  • Contractual Relationships: It regulates contracts and transactions involving corporations, ensuring compliance and accountability.
  • Dissolution and Insolvency: The framework addresses voluntary dissolutions and insolvency procedures to protect creditors and shareholders.
  • Private Enforcement: Corporate law is enforced primarily through private litigation rather than state action.
  • Compliance and Reporting: It sets disclosure requirements and compliance guidelines, particularly for companies operating under securities regulations.
  • Stakeholder Balance: The law ensures that the interests of various internal and external stakeholders, such as shareholders, directors, and creditors, are managed fairly throughout the corporation's lifecycle.

2023

• (Wikipedia, 2023) ⇒ https://en.wikipedia.org/wiki/Category:Business_law Retrieved:2023-8-3.
  • Business law consists of many different areas taught in the law school and business school

    curricula, including: Contracts, the law of Corporations and other Business Organizations, Securities Law, Intellectual Property, Antitrust, Secured Transactions, Commercial Paper, Income Tax, Pensions & Benefits, Trusts & Estates, Immigration Law, Labor Law, Employment Law and Bankruptcy. It is a branch of law that examines topics that impact the operation of a business.

2023

• (Wikipedia, 2023) ⇒ https://en.wikipedia.org/wiki/Corporate_law#Overview Retrieved:2023-8-3.
  • Academics identify four legal characteristics universal to business enterprises. These are:
    • Separate legal personality of the corporation (access to tort and contract law in a manner similar to a person)
    • Limited liability of the shareholders (a shareholder's personal liability is limited to the value of their shares in the corporation)
    • Transferable shares (if the corporation is a "public company", the shares are traded on a stock exchange)
    • Delegated management under a board structure; the board of directors delegates day-to-day management of the company to executives.
  • Widely available and user-friendly corporate law enables business participants to possess these four legal characteristics and thus transact as businesses. Thus, corporate law is a response to three endemic opportunism: conflicts between managers and shareholders, between controlling and non-controlling shareholders; and between shareholders and other contractual counterparts (including creditors and employees).

    A corporation may accurately be called a company; however, a company should not necessarily be called a corporation, which has distinct characteristics. In the United States, a company may or may not be a separate legal entity, and is often used synonymous with "firm" or "business." According to Black's Law Dictionary, in America a company means "a corporation — or, less commonly, an association, partnership or union — that carries on industrial enterprise." Other types of business associations can include partnerships (in the UK governed by the Partnership Act 1890), or trusts (Such as a pension fund), or companies limited by guarantee (like some community organizations or charities). Corporate law deals with companies that are incorporated or registered under the corporate or company law of a sovereign state or their sub-national states. The defining feature of a corporation is its legal independence from the shareholders that own it. Under corporate law, corporations of all sizes have separate legal personality, with limited or unlimited liability for its shareholders. Shareholders control the company through a board of directors which, in turn, typically delegates control of the corporation's day-to-day operations to a full-time executive. Shareholders' losses, in the event of liquidation, are limited to their stake in the corporation, and they are not liable for any remaining debts owed to the corporation's creditors. This rule is called limited liability, and it is why the names of corporations end with "Ltd." or some variant such as "Inc." or "plc." Under almost all legal systemscorporations have much the same legal rights and obligations as individuals. In some jurisdictions, this extends to allow corporations to exercise human rights against real individuals and the state, and they may be responsible for human rights violations. Just as they are "born" into existence through its members obtaining a certificate of incorporation, they can "die" when they lose money into insolvency. Corporations can even be convicted of criminal offences, such as corporate fraud and corporate manslaughter.

2021

• (Wikipedia, 2021) ⇒ https://en.wikipedia.org/wiki/corporate_law Retrieved:2021-2-16.
  • Corporate law (also known as business law or enterprise law or sometimes company law) is the body of law governing the rights, relations, and conduct of persons, companies, organizations and businesses. The term refers to the legal practice of law relating to corporations, or to the theory of corporations. Corporate law often describes the law relating to matters which derive directly from the life-cycle of a corporation. It thus encompasses the formation, funding, governance, and death of a corporation.

    While the minute nature of corporate governance as personified by share ownership, capital market, and business culture rules differ, similar legal characteristics - and legal problems - exist across many jurisdictions. Corporate law regulates how corporations, investors, shareholders, directors, employees, creditors, and other stakeholders such as consumers, the community, and the environment interact with one another. Whilst the term company or business law is colloquially used interchangeably with corporate law, business law often refers to wider concepts of commercial law, that is, the law relating to commercial or business related purposes and activities. In some cases, this may include matters relating to corporate governance or financial law. When used as a substitute for corporate law, business law means the law relating to the business corporation (or business enterprises), including such activity as raising capital, company formation, and registration with the government.

2020

• (LCP, 2020) ⇒ https://legalcareerpath.com/what-is-corporate-law/
  • QUOTE: There are five principles that are common to corporate law:
    1. 1. Legal personality

       Corporation owners pool their resources into a separate entity. That entity can use the assets and sell them. Creditors can’t easily take the assets back. Instead, they form their own entity that acts on its own.

    2. 2. Limited liability

       When a corporation gets sued, it’s only the corporation’s assets that are on the line. The plaintiff can’t go after the personal assets of the corporation’s owners. A corporation’s limited liability allows owners to take risks and diversify their investments.

    3. 3. Transferrable shares

       If an owner decides they no longer want a share in the corporation, the corporation doesn’t have to shut down. One of the unique features of a corporation is that owners can transfer shares without the same difficulties and hassles that come with transferring ownership of a partnership. There can be limits on how shareholders transfer ownership, but the fact that ownership can be transferred allows the corporation to go on when owners want to make changes.

    4. 4. Delegated management

       Corporations have a defined structure for how they conduct their affairs. There’s a board of directors and officers. These groups share and split decision-making authority. Board members hire and monitor officers. They also ratify their major decisions. The shareholders elect the board.

       Officers handle the day to day operation of the company. They’re the leaders for conducting transactions and making the business run each day. With a defined leadership structure, parties that do business with the corporation have the assurances that actions of officers and the board of directors are legally binding on the corporation.

    5. 5. Investor ownership

       Owners have a say in making decisions for the corporation, but they don’t directly run the company. Investors also have the right to the corporation’s profits. Usually, an owner has decision-making authority and profit sharing in proportion to their ownership interest. Owners typically vote to elect board members.

2004

• (Hansmann & Kraakman, 2004) ⇒ H. Hansmann, and R. Kraakman. (2004). “What is corporate law?”. In: Yale Law & Economics Research. Available at: papers.ssrn.com.
  • QUOTE: “… The corporate form provides a framework for businesses to operate efficiently, minimizing agency problems and facilitating trade and growth …”
  • NOTE: Discusses how the corporate form offers a structure that allows businesses to function efficiently, mitigating agency problems and promoting trade and growth.

1996

• (Easterbrook & Fischel, 1996) ⇒ F.H. Easterbrook, and D.R. Fischel. (1996). “The economic structure of corporate law”. Book. Available at: books.google.com.
  • QUOTE: “… This book delves into the underlying logic of corporate law, exploring its implications for corporate behavior and its interplay with broader economic structures …”
  • NOTE: Investigates the fundamental rationale behind corporate law, analyzing its effects on corporate behavior and its relationship with wider economic structures.

1990

• (Millon, 1990) ⇒ D. Millon. (1990). “Redefining corporate law”. In: Ind. L. Rev. Available at: HeinOnline.
  • QUOTE: “… The evolution of corporate law and its impact on business strategies and societal expectations is examined, challenging conventional notions …”
  • NOTE: Examines the progression of corporate law and its influence on business strategies and societal anticipations, questioning standard beliefs.

1958

• (Berle Jr, 1958) ⇒ A.A. Berle Jr. (1958). “Control in corporate law”. In: Colum. L. Rev. Available at: HeinOnline.
  • QUOTE: “… Control mechanisms, governance structures, and the legal doctrines influencing corporate decision-making are discussed in detail …”
  • NOTE: Discusses control mechanisms, governance structures, and the legal doctrines that shape corporate decision-making.

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