Joint-stock company

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A joint-stock company is a business entity in which shares of the company's stock can be bought and sold by shareholders. Each shareholder owns company stock in proportion, evidenced by their shares (certificates of ownership). [1] Shareholders are able to transfer their shares to others without any effects to the continued existence of the company. [2]

Stock financial instrument

The stock of a corporation is all of the shares into which ownership of the corporation is divided. In American English, the shares are commonly known as "stocks." A single share of the stock represents fractional ownership of the corporation in proportion to the total number of shares. This typically entitles the stockholder to that fraction of the company's earnings, proceeds from liquidation of assets, or voting power, often dividing these up in proportion to the amount of money each stockholder has invested. Not all stock is necessarily equal, as certain classes of stock may be issued for example without voting rights, with enhanced voting rights, or with a certain priority to receive profits or liquidation proceeds before or after other classes of shareholders.

A shareholder is an individual or institution that legally owns one or more shares of stock in a public or private corporation. Shareholders may be referred to as members of a corporation. Legally, a person is not a shareholder in a corporation until their name and other details are entered in the corporation‘s register of shareholders or members.

Share (finance) single unit of ownership in a corporation, mutual fund, or any other organization

In financial markets, a share is a unit used as mutual funds, limited partnerships, and real estate investment trusts. The owner of shares in the corporation/company is a shareholder of the corporation. A share is an indivisible unit of capital, expressing the ownership relationship between the company and the shareholder. The denominated value of a share is its face value, and the total of the face value of issued shares represent the capital of a company, which may not reflect the market value of those shares.

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In modern-day corporate law, the existence of a joint-stock company is often synonymous with incorporation (possession of legal personality separate from shareholders) and limited liability (shareholders are liable for the company's debts only to the value of the money they have invested in the company). Therefore, joint-stock companies are commonly known as corporations or limited companies.

Corporate law body of law that applies to the rights, relations, and conduct of persons, companies, organizations and businesses

Corporate law is the body of law governing the rights, relations, and conduct of persons, companies, organizations and businesses. It refers to the legal practice relating to, or 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.

Incorporation (business) the forming of a new corporation

Incorporation is the formation of a new corporation. The corporation may be a business, a nonprofit organization, sports club, or a government of a new city or town.

Corporation separate legal entity that has been incorporated through a legislative or registration process established through legislation

A corporation is an organization, usually a group of people or a company, authorized to act as a single entity and recognized as such in law. Early incorporated entities were established by charter. Most jurisdictions now allow the creation of new corporations through registration.

Some jurisdictions still provide the possibility of registering joint-stock companies without limited liability. In the United Kingdom and other countries that have adopted its model of company law, they are known as unlimited companies. In the United States, they are known simply as joint-stock companies.

A jurisdiction is an area with a set of laws under the control of a system of courts or government entity which are different from neighbouring areas.

United Kingdom Country in Europe

The United Kingdom (UK), officially the United Kingdom of Great Britain and Northern Ireland, and sometimes referred to as Britain, is a sovereign country located off the north-western coast of the European mainland. The United Kingdom includes the island of Great Britain, the north-eastern part of the island of Ireland, and many smaller islands. Northern Ireland is the only part of the United Kingdom that shares a land border with another sovereign state, the Republic of Ireland. Apart from this land border, the United Kingdom is surrounded by the Atlantic Ocean, with the North Sea to the east, the English Channel to the south and the Celtic Sea to the south-west, giving it the 12th-longest coastline in the world. The Irish Sea lies between Great Britain and Ireland. With an area of 242,500 square kilometres (93,600 sq mi), the United Kingdom is the 78th-largest sovereign state in the world. It is also the 22nd-most populous country, with an estimated 66.0 million inhabitants in 2017.

Unlimited company company where shareholders/members have unlimited legal liability

An unlimited company ("ULL") or private unlimited company is a hybrid company (corporation) incorporated with or without a share capital but where the legal liability of the members or shareholders is not limited: that is, its members or shareholders have a joint, several and non-limited obligation to meet any insufficiency in the assets of the company to enable settlement of any outstanding financial liability in the event of the company's formal liquidation. ULLs do not have to file public accounts and thus offer greater secrecy.

Advantages

Ownership refers to a large number of privileges. The company is managed on behalf of the shareholders by a board of directors, elected at an annual general meeting.

The shareholders also vote to accept or reject an annual report and audited set of accounts. Individual shareholders can sometimes stand for directorships within the company if a vacancy occurs, but that is uncommon.

The shareholders are usually liable for any of the company debts that extend beyond the company's ability to pay up to the amount of them.

Early joint-stock companies

The transfer letter from 1288 through which Bishop Peter of Vasteras reacquires an eighth of Tiskasjoberg, Kopparberget. The original can be found at Riksarkivet (National Archive) in Stockholm. Stora Kopparberg 1288.jpg
The transfer letter from 1288 through which Bishop Peter of Västerås reacquires an eighth of Tiskasjöberg, Kopparberget. The original can be found at Riksarkivet (National Archive) in Stockholm.
Replica of an East Indiaman of the Dutch East India Company/United East India Company (VOC). Founded in 1602, the VOC was a pioneering early model of joint-stock companies at the dawn of modern capitalism. The VOC is often considered by many to be the world's first permanently organized limited-liability joint-stock company , with a permanent capital base. In other words, the VOC was the first recorded joint-stock company to get a fixed capital stock. Vereenigde Oostindische Compagnie spiegelretourschip Amsterdam replica.jpg
Replica of an East Indiaman of the Dutch East India Company/United East India Company (VOC). Founded in 1602, the VOC was a pioneering early model of joint-stock companies at the dawn of modern capitalism. The VOC is often considered by many to be the world's first permanently organized limited-liability joint-stock company , with a permanent capital base. In other words, the VOC was the first recorded joint-stock company to get a fixed capital stock.
One of the oldest known stock certificates, issued by the VOC chamber of Enkhuizen, dated 9 Sep 1606. VOC aandeel 9 september 1606.jpg
One of the oldest known stock certificates, issued by the VOC chamber of Enkhuizen, dated 9 Sep 1606.
Courtyard of the Amsterdam Stock Exchange (or Beurs van Hendrick de Keyser in Dutch), the world's first formal stock exchange. The VOC's 17th-century business model played a crucial role in the evolution of modern-day joint-stock corporations, especially publicly traded companies. MG 056-De Beurs van Hendrick de Keyser.jpg
Courtyard of the Amsterdam Stock Exchange (or Beurs van Hendrick de Keyser in Dutch), the world's first formal stock exchange. The VOC's 17th-century business model played a crucial role in the evolution of modern-day joint-stock corporations, especially publicly traded companies.

Finding the earliest joint-stock company is a matter of definition. The earliest records of joint stock company can be found in China during the Song Dynasty (960–1279). Around 1250 in France at Toulouse, 96 shares of the Société des Moulins du Bazacle, or Bazacle Milling Company were traded at a value that depended on the profitability of the mills the society owned, making it probably the first company of its kind in history. [13] [14] The Swedish company Stora has documented a stock transfer for an eighth of the company (or more specifically, the mountain in which the copper resource was available) as early as 1288.

For over three centuries during the Song dynasty (960–1279) China experienced sustained growth in per capita income and population, structural change in the economy, and increased pace of technological innovation. Movable print, improved seeds for rice and other commercial crops, gunpowder, water-powered mechanical clocks, the use of coal as a source of fuel for a variety of industries, improved techniques for iron and steel production, pound locks and many other technological innovations transformed the economy. In north China, the main fuel source for ceramic kilns and iron furnaces shifted from wood to coal.

France Republic with mainland in Europe and numerous oversea territories

France, officially the French Republic, is a country whose territory consists of metropolitan France in Western Europe and several overseas regions and territories. The metropolitan area of France extends from the Mediterranean Sea to the English Channel and the North Sea, and from the Rhine to the Atlantic Ocean. It is bordered by Belgium, Luxembourg and Germany to the northeast, Switzerland and Italy to the east, and Andorra and Spain to the south. The overseas territories include French Guiana in South America and several islands in the Atlantic, Pacific and Indian oceans. The country's 18 integral regions span a combined area of 643,801 square kilometres (248,573 sq mi) and a total population of 67.3 million. France, a sovereign state, is a unitary semi-presidential republic with its capital in Paris, the country's largest city and main cultural and commercial centre. Other major urban areas include Lyon, Marseille, Toulouse, Bordeaux, Lille and Nice.

Toulouse Prefecture and commune in Occitanie, France

Toulouse is the capital of the French department of Haute-Garonne and of the region of Occitanie. The city is on the banks of the River Garonne, 150 kilometres from the Mediterranean Sea, 230 km (143 mi) from the Atlantic Ocean and 680 km (420 mi) from Paris. It is the fourth-largest city in France, with 466,297 inhabitants as of January 2014. In France, Toulouse is called the "Pink City".

In more recent history, the earliest joint-stock company recognized in England was the Company of Merchant Adventurers to New Lands, chartered in 1553 with 250 shareholders. Muscovy Company, which had a monopoly on trade between Moscow and London, was chartered soon after in 1555. The much more famous, wealthy and powerful English (later British) East India Company was granted an English Royal Charter by Elizabeth I on December 31, 1600, with the intention of favouring trade privileges in India. The Royal Charter effectively gave the newly created Honourable East India Company a 15-year monopoly on all trade in the East Indies. [15] The Company transformed from a commercial trading venture to one that ruled India and exploited its resources, as it acquired auxiliary governmental and military functions, until its dissolution.

The Company of Merchant Adventurers to New Lands was an early joint stock association, which began with private exploration and enterprise, and was to have been incorporated by King Edward VI in 1553, but received its full Royal Charter in 1555. It led to the commencement of English trade with Russia, Persia and elsewhere, and became known informally, and later formally, as the Muscovy Company.

Muscovy Company 16th-century business enterprise

The Muscovy Company was an English trading company chartered in 1555. It was the first major chartered joint stock company, the precursor of the type of business that would soon flourish in England, and became closely associated with such famous names as Henry Hudson and William Baffin. The Muscovy Company had a monopoly on trade between England and Muscovy until 1698 and it survived as a trading company until the Russian Revolution of 1917. Since 1917 the company has operated as a charity, now working within Russia.

Moscow Capital city of Russia

Moscow is the capital and most populous city of Russia, with 13.2 million residents within the city limits, 17 million within the urban area and 20 million within the metropolitan area. Moscow is one of Russia's federal cities.

Soon afterwards, in 1602, the Dutch East India Company issued shares that were made tradable on the Amsterdam Stock Exchange. That invention enhanced the ability of joint-stock companies to attract capital from investors, as they could now easily dispose their shares. In 1612, it became the first 'corporation' in intercontinental trade with 'locked in' capital and limited liability.

The Dutch East India Company was an early megacorporation founded by a government-directed amalgamation of several rival Dutch trading companies (voorcompagnieën) in the early 17th century. It was established on March 20, 1602 as a chartered company to trade with India and Indianised Southeast Asian countries when the Dutch government granted it a 21-year monopoly on the Dutch spice trade. It has been often labelled a trading company or sometimes a shipping company. However, VOC was in fact a proto-conglomerate company, diversifying into multiple commercial and industrial activities such as international trade, shipbuilding, and both production and trade of East Indian spices, Formosan sugarcane, and South African wine.. The Company was a transcontinental employer and an early pioneer of outward foreign direct investment. The Company's investment projects helped raise the commercial and industrial potential of many underdeveloped or undeveloped regions of the world in the early modern period. In the early 1600s, by widely issuing bonds and shares of stock to the general public, VOC became the world's first formally-listed public company. In other words, it was the first corporation to be listed on an official stock exchange. It was influential in the rise of corporate-led globalisation in the early modern period.

During the period of colonialism, Europeans, initially the British, trading with the Near East for goods, pepper and calico for example, enjoyed spreading the risk of trade over multiple sea voyages. The joint-stock company became a more viable financial structure than previous guilds or state-regulated companies. The first joint-stock companies to be implemented in the Americas were The London Company and The Plymouth Company.

Transferable shares often earned positive returns on equity, which is evidenced by investment in companies like the British East India Company, which used the financing model to manage trade in India. Joint-stock companies paid out divisions (dividends) to their shareholders by dividing up the profits of the voyage in the proportion of shares held. Divisions were usually cash, but when working capital was low and detrimental to the survival of the company, divisions were either postponed or paid out in remaining cargo, which could be sold by shareholders for profit.

The East India Company's flag initially had the flag of England, St George's Cross, in the corner. British East India Company flag.svg
The East India Company's flag initially had the flag of England, St George's Cross, in the corner.

However, in general, incorporation was possible by royal charter or private act, and it was limited because of the government's jealous protection of the privileges and advantages thereby granted.

As a result of the rapid expansion of capital-intensive enterprises in the course of the Industrial Revolution in Britain, many businesses came to be operated as unincorporated associations or extended partnerships, with large numbers of members. Nevertheless, membership of such associations was usually for a short term so their nature was constantly changing.

Consequently, registration and incorporation of companies, without specific legislation, was introduced by the Joint Stock Companies Act 1844. Initially, companies incorporated under this Act did not have limited liability, but it became common for companies to include a limited liability clause in their internal rules. In the case of Hallett v Dowdall, the English Court of the Exchequer held that such clauses bound people who have notice of them. Four years later, the Joint Stock Companies Act 1856 provided for limited liability for all joint-stock companies provided, among other things, that they included the word "limited" in their company name. The landmark case of Salomon v A Salomon & Co Ltd established that a company with legal liability, not being a partnership, had a distinct legal personality that was separate from that of its individual shareholders.

Corporate law

The existence of a corporation requires a special legal framework and body of law that specifically grants the corporation legal personality, and it typically views a corporation as a fictional person, a legal person, or a moral person (as opposed to a natural person) which shields its owners (shareholders) from "corporate" losses or liabilities; losses are limited to the number of shares owned. It furthermore creates an inducement to new investors (marketable stocks and future stock issuance). Corporate statutes typically empower corporations to own property, sign binding contracts, and pay taxes in a capacity separate from that of its shareholders, who are sometimes referred to as "members". The corporation is also empowered to borrow money, both conventionally and directly to the public, by issuing interest-bearing bonds. Corporations subsist indefinitely; "death" comes only by absorption (takeover) or bankruptcy. According to Lord Chancellor Haldane,

...a corporation is an abstraction. It has no mind of its own any more than it has a body of its own; its active and directing will must consequently be sought in the person of somebody who is really the directing mind and will of the corporation, the very ego and centre of the personality of the corporation.

This 'directing will' is embodied in a corporate Board of Directors. The legal personality has two economic implications. It grants creditors (as opposed to shareholders or employees) priority over the corporate assets upon liquidation. Second, corporate assets cannot be withdrawn by its shareholders, and assets of the firm cannot be taken by personal creditors of its shareholders. The second feature requires special legislation and a special legal framework, as it cannot be reproduced via standard contract law. [16]

The regulations most favorable to incorporation include:

RegulationDescription
Limited liabilityUnlike a partnership or sole proprietorship, shareholders of a modern business corporation have "limited" liability for the corporation's debts and obligations. [17] As a result, their losses cannot exceed the amount that they contributed to the corporation as dues or payment for shares. That enables corporations to "socialize their costs" for the primary benefit of shareholders; to socialize a cost is to spread it to society in general. [18] The economic rationale is that it allows anonymous trading in the shares of the corporation by eliminating the corporation's creditors as a stakeholder in such a transaction. Without limited liability, a creditor would probably not allow any share to be sold to a buyer at least as creditworthy as the seller. Limited liability further allows corporations to raise large amounts of finance for their enterprises by combining funds from many owners of stock. Limited liability reduces the amount that a shareholder can lose in a company. That increases the attraction to potential shareholders and so increases both the number of willing shareholders and the amount they are likely to invest. However, some jurisdictions also permit another type of corporation in which shareholders' liability is unlimited, for example the unlimited liability corporation in two provinces of Canada, and the unlimited company in the United Kingdom.
Perpetual lifetimeAnother advantage is that the assets and structure of the corporation may continue beyond the lifetimes of its shareholders and bondholders. That allows stability and the accumulation of capital, which is thus available for investment in larger and longer-lasting projects than if the corporate assets were subject to dissolution and distribution. That was also important in medieval times, when land donated to the Church (a corporation) would not generate the feudal fees that a lord could claim upon a landholder's death: see Statute of Mortmain. (However a corporation can be dissolved by a government authority by putting an end to its existence as a legal entity. That rarely happens unless the company breaks the law, for example, fails to meet annual filing requirements or, in certain circumstances, if the company requests dissolution.)

Financial disclosure

In many jurisdictions, corporations whose shareholders benefit from limited liability are required to publish annual financial statements and other data so that creditors who do business with the corporation are able to assess the credit-worthiness of the corporation and cannot enforce claims against shareholders. [19] Shareholders, therefore, experience some loss of privacy in return for limited liability. That requirement generally applies in Europe, but not in common law jurisdictions, except for publicly traded corporations (for which financial disclosure is required for investor protection).

Corporate taxation

In many countries, corporate profits are taxed at a corporate tax rate, and dividends paid to shareholders are taxed at a separate rate. Such a system is sometimes referred to as "double taxation" because any profits distributed to shareholders will eventually be taxed twice. One solution, followed by as in the case of the Australian and UK tax systems, is for the recipient of the dividend to be entitled to a tax credit to address the fact that the profits represented by the dividend have already been taxed. The company profit being passed on is thus effectively taxed only at the rate of tax paid by the eventual recipient of the dividend.

In other systems, dividends are taxed at a lower rate than other income (for example, in the US), or shareholders are taxed directly on the corporation's profits, while dividends are not taxed (for example, S corporations in the US).

Closely held corporations and publicly traded corporations

The institution most often referenced by the word "corporation" is publicly traded, which means that the company's shares are traded on a public stock exchange (for example, the New York Stock Exchange or Nasdaq in the United States) whose shares of stock of corporations are bought and sold by and to the general public. Most of the largest businesses in the world are publicly traded corporations.

However, the majority of corporations are privately held, or closely held, so there is no ready market for the trading of shares. Many such corporations are owned and managed by a small group of businesspeople or companies, but the size of such a corporation can be as vast as the largest public corporations.

Closely held corporations have some advantages over publicly traded corporations. A small, closely held company can often make company-changing decisions much more rapidly than a publicly traded company, as there will generally be fewer voting shareholders, and the shareholders would have common interests. A publicly traded company is also at the mercy of the market, with capital flow in and out based not only on what the company is doing but also on what the market and even what the competitors, major and minor, are doing.

However, publicly traded companies also have advantages over their closely held counterparts. Publicly traded companies often have more working capital and can delegate debt throughout all shareholders. Therefore, shareholders of publicly traded company will each take a much smaller hit to their returns as opposed to those involved with a closely held corporation. Publicly traded companies, however, can suffer from that advantage. A closely held corporation can often voluntarily take a hit to profit with little to no repercussions if it is not a sustained loss. A publicly traded company often comes under extreme scrutiny if profit and growth are not evident to stock holders, thus stock holders may sell, further damaging the company. Often, that blow is enough to make a small public company fail.[ citation needed ]

Often, communities benefit from a closely held company more so than from a public company. A closely held company is far more likely to stay in a single place that has treated it well even if that means going through hard times. Shareholders can incur some of the damage the company may receive from a bad year or slow period in the company profits. Closely held companies often have a better relationship with workers. In larger, publicly traded companies, often after only one bad year, the first area to feel the effects is the workforce with layoffs or worker hours, wages or benefits being cut. Again, in a closely held business the shareholders can incur the profit damage rather than passing it to the workers.[ citation needed ]

The affairs of publicly traded and closely held corporations are similar in many respects. The main difference in most countries is that publicly traded corporations have the burden of complying with additional securities laws, which (especially in the US) may require additional periodic disclosure (with more stringent requirements), stricter corporate governance standards as well as additional procedural obligations in connection with major corporate transactions (for example, mergers) or events (for example, elections of directors).[ citation needed ]

A closely held corporation may be a subsidiary of another corporation (its parent company), which may itself be either a closely held or a public corporation. In some jurisdictions, the subsidiary of a listed public corporation is also defined as a public corporation (for example, in Australia).

By countries

Australia

In Australia corporations are registered and regulated by the Commonwealth Government through the Australian Securities and Investments Commission. Corporations law has been largely codified in the Corporations Act 2001.

Brazil

In Brazil there are many different types of legal entities (sociedades), but the two most common ones commercially speaking are (i) sociedade limitada, identified by "Ltda." or "Limitada" after the company's name, equivalent to the British limited liability company, and (ii) sociedade anônima or companhia, identified by "SA" or "Companhia" in the company's name, equivalent to the British public limited company. The "Ltda." is mainly governed by the new Civil Code, enacted in 2002, and the "SA", by Law 6.404, dated December 15, 1976, as amended.

Bulgaria

In Bulgaria, a joint-stock company is called a aktsionerno druzhestvo or AD (Bulgarian : Акционерно дружество or АД)

Canada

In Canada both the federal government and the provinces have corporate statutes, and thus a corporation may be incorporated either provincially or federally. Many older corporations in Canada stem from Acts of Parliament passed before the introduction of general corporation law. The oldest corporation in Canada is the Hudson's Bay Company; though its business has always been based in Canada, its Royal Charter was issued in England by King Charles II in 1670, and became a Canadian charter by amendment in 1970 when it moved its corporate headquarters from London to Canada. Federally recognized corporations are regulated by the Canada Business Corporations Act.

Chile

The Chilean form of joint-stock company is called sociedad por acciones (often abbreviated "SpA"). They were created in 2007 by Law N° 20.190, and they are the most recent variety of societary types, as they represent a simplified form of corporation – originally conceived for venture capital companies.

Czech Republic and Slovakia

The Czech form of the public limited company is called akciová společnost (a.s.) and its private counterpart is called společnost s ručením omezeným (s.r.o.). Their Slovak equivalents are called akciová spoločnosť (a.s.) and spoločnosť s ručením obmedzeným (s.r.o.). [20]

German-speaking countries

Germany, Austria, Switzerland and Liechtenstein recognize two forms of company limited by shares: the Aktiengesellschaft (AG), analogous to public limited companies (or corporations in US/Can) in the English-speaking world, and the Gesellschaft mit beschränkter Haftung (GmbH), similar to the modern private limited company.

Italy

Italy recognizes three types of company limited by shares: the public limited company [ citation needed ] ( società per azioni , or S.p.A.), the private limited company [ citation needed ] (società a responsabilità limitata, or S.r.l.), and the publicly traded partnership[ citation needed ] (società in accomandita per azioni, or S.a.p.a.). The latter is a hybrid of the limited partnership and public limited company, having two categories of shareholders, some with and some without limited liability, and is rarely used in practice.[ citation needed ]

Japan

In Japan, both the state and local public entities under the Local Autonomy Act (now 47 prefectures, made in the 19th century and municipalities) are considered to be corporations(法人,hōjin). Non-profit corporations may be established under the Civil Code.

The term "company"(会社,kaisha) or (企業 kigyō) is used to refer to business corporations. The predominant form is the Kabushiki gaisha (株式会社), used by public corporations as well as smaller enterprises. Mochibun kaisha (持分会社), a form for smaller enterprises, are becoming increasingly common. Between 2002 and 2008, the intermediary corporation (中間法人,chūkan hōjin) existed to bridge the gap between for-profit companies and non-governmental and non-profit organizations.

Norway

In Norway a joint-stock company is called an aksjeselskap, abbreviated AS. A special and by far less common form of joint-stock companies, intended for companies with a large number of shareholders, is the publicly traded joint-stock companies, called allmennaksjeselskap and abbreviated ASA. A joint-stock company must be incorporated, has an independent legal personality and limited liability, and is required to have a certain capital upon incorporation. Ordinary joint-stock companies must have a minimum capital of NOK 30,000 upon incorporation, which was reduced from 100,000 in 2012. Publicly traded joint-stock companies must have a minimum capital of NOK 1 million.

Romania

In Romania, a joint-stock company is called "societate pe acțiuni". According to Law 31/1991 there are two types of joint-stock companies: "societatea pe acțiuni" and "societate în comandită pe acţiuni".

Russia

See: Open joint-stock company (OJSC).

Spain

In Spain there are two types of companies with limited liability: (i) "S.L.", or Sociedad Limitada (a private limited company), and (ii) "S.A.", or Sociedad Anónima (similar to a public limited company).

Ukraine

There exist several types of joint stock companies (Ukrainian : Акціонерне Товариство, Aktsionerne Tovarystvo) in Ukraine. Due to specifics of the Soviet economy, all enterprises in the Soviet republic as the rest of the Soviet Union were state owned and private entrepreneurship was strictly prohibited and criminally prosecuted. Following the Gorbachev initiated broad spectrum reforms (perestroika), there was introduced a term of khozraschet and permission for organization of public economic entities called cooperatives.

Following dissolution of the Soviet Union, Ukraine's economy along with the rest former Soviet republics was further reformed to more liberal. Along with private entrepreneurship, many state owned companies were privatized, primarily by the former party's apparatchiks which gave a rise of another term "Red directors". Many companies started to be sold at open market and commercialized. Those companies were transformed in joint-stock companies by selling their shares for mutual cooperation and investment.

As in the rest former Soviet republics (predominantly Russia) in Ukraine were created following commercial companies:

In 2009 further reforms were introduced and open joint-stock companies were forced to be restructured as public joint-stock company (Ukrainian: Публічне Акціонерне Товариство, Publichne Aktsionerne Tovarystvo) or private joint-stock company (Ukrainian: Приватне Акціонерне Товариство, Pryvatne Aktsionerne Tovarystvo). [21]

Minimum amount of share capital is 1250 minimum wages (as of 1 January 2017 4,000,000 UAH or 148,000 USD).

Ukraine National Securities and Stock Market Commission is the main stock market state authority.

United Kingdom

Most companies are regulated by the Companies Act 2006 (or the Northern Ireland equivalent). The most common type of company is the private limited company ("Limited" or "Ltd"). Private limited companies can either be limited by shares or by guarantee. Other corporate forms include the public limited company ("plc") and the private unlimited company.

Some corporations, both public and private sector, are formed by Royal Charter or Act of Parliament.

A special type of corporation is a corporation sole, which is an office held by an individual natural person (the incumbent), but which has a continuing legal entity separate from that person.

United States

Several types of conventional corporations exist in the United States. Generically, any business entity that is recognized as distinct from the people who own it (i.e., is not a sole proprietorship or a partnership) is a corporation. This generic label includes entities that are known by such legal labels as ‘association’, ‘organization’ and ‘limited liability company’, as well as corporations proper.

Only a company that has been formally incorporated according to the laws of a particular state is called ‘corporation’. A corporation was defined in the Dartmouth College case of 1819, in which Chief Justice Marshall of the United States Supreme Court stated that " A corporation is an artificial being, invisible, intangible, and existing only in contemplation of the law". A corporation is a legal entity, distinct and separate from the individuals who create and operate it. As a legal entity the corporation can acquire, own, and dispose of property in its own name like buildings, land and equipment. It can also incur liabilities and enter into contracts like franchising and leasing. American corporations can be either profit-making companies or non-profit entities. Tax-exempt non-profit corporations are often called “501(c)3 corporation”, after the section of the Internal Revenue Code that addresses the tax exemption for many of them.

In some states, such as Colorado, a corporation may represent itself pro se in courts of law in some situations [22]

The federal government can only create corporate entities pursuant to relevant powers in the U.S. Constitution. Thus, virtually all corporations in the U.S. are incorporated under the laws of a particular state. A major exception to the federal nonparticipation in the incorporation of private businesses is in banking; under the National Bank Act, banks may receive charters from the federal government as "national banks," subjecting them to the regulation of the federal Office of the Comptroller of the Currency rather than state banking regulators.

All states have some kind of "general corporation law" (California, Delaware, Kansas, Nevada and Ohio actually use that exact name) which authorizes the formation of private corporations without having to obtain a charter for each one from the state legislature (as was formerly the case in the 19th century). Many states have separate, self-contained laws authorizing the formation and operation of certain specific types of corporations that are wholly independent of the state general corporation law. For example, in California, nonprofit corporations are incorporated under the Nonprofit Corporation Law, and in Illinois, insurers are incorporated under the Illinois Insurance Code.

Corporations are created by filing the requisite documents with a particular state government. The process is called “incorporation,” referring to the abstract concept of clothing the entity with a "veil" of artificial personhood (embodying, or “corporating” it, ‘corpus’ being the Latin word for ‘body’). Only certain corporations, including banks, are chartered. Others simply file their articles of incorporation with the state government as part of a registration process.

Once incorporated, a corporation has artificial personhood everywhere it may operate, until such time as the corporation may be dissolved. A corporation that operates in one state while being incorporated in another is a “foreign corporation.” This label also applies to corporations incorporated outside of the United States. Foreign corporations must usually register with the secretary of state’s office in each state to lawfully conduct business in that state.

A corporation is legally a citizen of the state (or other jurisdiction) in which it is incorporated (except when circumstances direct the corporation be classified as a citizen of the state in which it has its head office, or the state in which it does the majority of its business). Corporate business law differs dramatically from state to state. Many prospective corporations choose to incorporate in a state whose laws are most favorable to its business interests. Many large corporations are incorporated in Delaware, for example, without being physically located there because that state has very favorable corporate tax and disclosure laws.[ citation needed ]

Companies set up for privacy or asset protection often incorporate in Nevada, which does not require disclosure of share ownership. Many states, particularly smaller ones, have modeled their corporate statutes after the Model Business Corporation Act, one of many model sets of law prepared and published by the American Bar Association.[ citation needed ]

As juristic persons, corporations have certain rights that attach to natural persons. The vast majority of them attach to corporations under state law, especially the law of the state in which the company is incorporated – since the corporations very existence is predicated on the laws of that state. A few rights also attach by federal constitutional and statutory law, but they are few and far between compared to the rights of natural persons. For example, a corporation has the personal right to bring a lawsuit (as well as the capacity to be sued) and, like a natural person, a corporation can be libeled. [ citation needed ]

Harvard College, an undergraduate school of Harvard University, formally the President and Fellows of Harvard College (also known as the Harvard Corporation), is the oldest corporation in the western hemisphere. Founded in 1636, the second of Harvard’s two governing boards was incorporated by the Great and General Court of Massachusetts in 1650. Significantly, Massachusetts itself was a corporate colony at that time – owned and operated by the Massachusetts Bay Company (until it lost its charter in 1684) - so Harvard College is a corporation created by a corporation.

Many nations have modeled their own corporate laws on American business law. Corporate law in Saudi Arabia, for example, follows the model of New York State corporate law. In addition to typical corporations in the United States, the federal government, in 1971 passed the Alaska Native Claims Settlement Act (ANCSA), which authorized the creation of 12 regional native corporations for Alaska Natives and over 200 village corporations that were entitled to a settlement of land and cash. In addition to the 12 regional corporations, the legislation permitted a 13th regional corporation without a land settlement for those Alaska Natives living out of the State of Alaska at the time of passage of ANCSA.

Other business entities

Almost every recognized type of organization carries out some economic activities (for example, the family). Other organizations that may carry out activities that are generally considered to be business exist under the laws of various countries:

See also

Related Research Articles

Business organization involved in commercial, industrial, or professional activity

Business is the activity of making one's living or making money by producing or buying and selling products. Simply put, it is "any activity or enterprise entered into for profit. It does not mean it is a company, a corporation, partnership, or have any such formal organization, but it can range from a street peddler to General Motors."

Dividend payment made by a corporation to its shareholders, usually as a distribution of profits

A dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits. When a corporation earns a profit or surplus, the corporation is able to re-invest the profit in the business and pay a proportion of the profit as a dividend to shareholders. Distribution to shareholders may be in cash or, if the corporation has a dividend reinvestment plan, the amount can be paid by the issue of further shares or share repurchase. When dividends are paid, shareholders typically must pay income taxes, and the corporation does not receive a corporate income tax deduction for the dividend payments.

Equity (finance) difference between the value of the assets/interest and the cost of the liabilities of something owned

In accounting, equity is the difference between the value of the assets and the value of the liabilities of something owned. It is governed by the following equation:

S.A. (corporation) type of corporation in countries that mostly employ civil law

S.A. or Société anonyme designates a type of corporation in countries that mostly employ civil law. Depending on language, it means anonymous company, anonymous partnership, share company, or joint-stock company, roughly equivalent to public limited company in common law jurisdictions. It is different from partnerships and private limited companies.

A dividend tax is the tax imposed by a tax authority on dividends received by shareholders (stockholders) of a company.

Limited liability company US-specific form of a private limited company

A limited liability company (LLC) is the US-specific form of a private limited company. It is a business structure that can combine the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation. An LLC is not a corporation under state law; it is a legal form of a company that provides limited liability to its owners in many jurisdictions. LLCs are well known for the flexibility that they provide to business owners; depending on the situation, an LLC may elect to use corporate tax rules instead of being treated as a partnership, and, under certain circumstances, LLCs may be organized as not-for-profit. In certain U.S. states, businesses that provide professional services requiring a state professional license, such as legal or medical services, may not be allowed to form an LLC but may be required to form a similar entity called a professional limited liability company (PLLC).

Limited company company in which the liability of members or subscribers of the company is limited

In a limited company, the liability of members or subscribers of the company is limited to what they have invested or guaranteed to the company. Limited companies may be limited by shares or by guarantee. The former may be further divided in public companies and private companies. Who may become a member of a private limited company is restricted by law and by the company's rules. In contrast, anyone may buy shares in a public limited company.

Private limited company type of company used in many jurisdictions

A private limited company is a type of business entity in "private" ownership used in many jurisdictions in contrast to "public" ownership, with some differences from country to country. Examples include LLC in the US, private company limited by shares in the UK, GmbH in Germany or společnost s ručením omezeným in the Czech Republic.

A corporate tax, also called corporation tax or company tax, is a direct tax* imposed by a jurisdiction on the income or capital of corporations or analogous legal entities. Many countries impose such taxes at the national level, and a similar tax may be imposed at state or local levels. The taxes may also be referred to as income tax or capital tax. Partnerships are generally not taxed at the entity level. A country's corporate tax may apply to. tax paid to the government directly because it is direct tax

Privately held company business company owned either by non-governmental organizations or by a relatively small number of shareholders or company members, and the companys capital stock is offered, owned and traded or exchanged privately

A privately held company, private company, or close corporation is a business company owned either by non-governmental organizations or by a relatively small number of shareholders or company members which does not offer or trade its company stock (shares) to the general public on the stock market exchanges, but rather the company's stock is offered, owned and traded or exchanged privately or over-the-counter. More ambiguous terms for a privately held company are closely held corporation, unquoted company, and unlisted company.

Limited partnership form of partnership

A limited partnership (LP) is a form of partnership similar to a general partnership except that while a general partnership must have at least two general partners (GPs), a limited partnership must have at least one GP and at least one limited partner.

Corporate tax in the United States

Corporate tax is imposed in the United States at the federal, most state, and some local levels on the income of entities treated for tax purposes as corporations. Since January 1, 2018, the nominal federal corporate tax rate in the United States of America is a flat 21% due to the passage of the Tax Cuts and Jobs Act of 2017. State and local taxes and rules vary by jurisdiction, though many are based on federal concepts and definitions. Taxable income may differ from book income both as to timing of income and tax deductions and as to what is taxable. The corporate Alternative Minimum Tax was also eliminated by the 2017 reform, but some states have alternative taxes. Like individuals, corporations must file tax returns every year. They must make quarterly estimated tax payments. Groups of corporations controlled by the same owners may file a consolidated return.

There are three types of business entity in Russia: limited liability companies (LLC), joint-stock companies (JSC), and partnerships. The first two of these are joint-stock companies and have limited liability.

South African company law

South African company law is that body of rules which regulates corporations formed under the Companies Act. A company is a business organisation which earns income by the production or sale of goods or services. This entry also covers rules by which partnerships and trusts are governed in South Africa, together with cooperatives and sole proprietorships.

References

Citations

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  2. "Joint Stock Company". West's Encyclopedia of American Law. Retrieved 4 May 2012.
  3. Morck, Randall; Yeung, Bernard: Agency Problems and the Fate of Capitalism. (Cambridge, MA: National Bureau of Economic Research, Working Paper No. 16490, Issued in October 2010)
  4. Funnell, Warwick; Robertson, Jeffrey: Accounting by the First Public Company: The Pursuit of Supremacy. (Routledge, 2013, ISBN   0415716179)
  5. Steensgaard, Niels (1982), 'The Dutch East India Company as an Institutional Innovation,'; in Maurice Aymard (ed.), Dutch Capitalism and World Capitalism / Capitalisme hollandais et capitalisme mondial (Studies in Modern Capitalism / Etudes sur le capitalisme moderne), pp. 235–257
  6. Hawley, James P.; Williams, Andrew T.: The Rise of Fiduciary Capitalism: How Institutional Investors Can Make Corporate America More Democratic. (University of Pennsylvania Press, 2000, ISBN   9780812235630), p. 44
  7. Ferguson, Niall (2002). Empire: The Rise and Demise of the British World Order and the Lessons for Global Power, p. 15.
  8. Smith, B. Mark (2003). A History of the Global Stock Market: From Ancient Rome to Silicon Valley. (University of Chicago Press, ISBN   9780226764047), p. 17
  9. Von Nordenflycht, Andrew (2011), 'The Great Expropriation: Interpreting the Innovation of “Permanent Capital” at the Dutch East India Company,'; in Origins of Shareholder Advocacy, edited by Jonathan G.S. Koppell. (Palgrave Macmillan, 2011), pp. 89–98
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  17. A leading case in common law is Salomon v. Salomon & Co. [1897] AC 22.
  18. Hock, Dee (2005). One from Many: VISA and the Rise of Chaordic Organization. Berrett-Koehler Publishers. p. 140. ISBN   1-57675-332-8. ... they have become a superb instrument for the capitalization of gain and the socialization of cost.
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  20. Cross-Border Mergers in Europe, Vol. 1 edited by Dirk Van Gerven, Cambridge University Press, pg. 148 OCLC   495475469
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  22. Brachfeld, Aaron, USDA (February 2012). "Judge Boyette rules on corporate rights to self-represent" Meadowlark Herald Volume 3 Issue 6. Retrieved February 19, 2012.

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