Non-stock corporation

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A non-stock corporation (or nonstock corporation) is a corporation that does not have owners represented by shares of stock, [1] in contrast to a joint-stock company. A non-stock corporation typically has members who are the functional equivalent of shareholders in a stock corporation. The members may have the right to vote (and other rights) based on the bylaws of the corporation. Non-stock corporations may also choose to have no members.

Contents

The vast majority of not-for-profit corporations are non-stock corporations. (Some states, such as Kansas, allow nonprofits to issue stock. [2] For example, the Cato Institute is set up this way. [3] ) While rare, it is also possible for a for-profit corporation to be a non-stock corporation.[ citation needed ]

In many jurisdictions, a nonstock corporation can elect to become a stock corporation if certain conditions are met. For example, the Cato Institute was once a nonstock corporation under Kansas law that elected to become a stock corporation. [3]

Jurisdictions

In the United States, law in Pennsylvania and Virginia supports the formation and existence of non-stock corporations, [4] [5] as well as other states.[ citation needed ]

Delaware

In Delaware, nonstock corporations are provisioned for by its General Corporation Law. [6] According to DGCL, Delaware only allows only the directors to serve as members of a non-stock corporation. [7]

Kansas

In Kansas, some provisions of the Kansas general corporation code also apply to nonstock corporations, where a nonstock corporation is defined as a "corporation organized under the Kansas general corporation code that is not authorized to issue capital stock." [8]

Maryland

According to the Maryland Code, the provisions of Maryland General Corporation Law apply to nonstock corporations except in special circumstances. [9]

Pennsylvania

Title 15, Chapter 21 of the Consolidated States of Pennsylvania provides the laws regarding Pennsylvania nonstock corporations. [10] Existing stock corporations can elect to become nonstock corporations. [10]

Types

There are different reasons for forming a non-stock, for profit corporation.

In many jurisdictions the yearly renewal fees imposed on corporations can be higher than the initial filing fee.[ citation needed ]

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<span class="mw-page-title-main">Limited liability company</span> US form of a private limited company

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<span class="mw-page-title-main">Joint-stock company</span> Business entity which is owned by shareholders

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. Shareholders are able to transfer their shares to others without any effects to the continued existence of the company.

<span class="mw-page-title-main">Incorporation (business)</span> Legal process to create a new corporation

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<span class="mw-page-title-main">Private limited company</span> Type of company used in many jurisdictions

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<span class="mw-page-title-main">Corporate law</span> Body of law that governs businesses

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<span class="mw-page-title-main">Articles of association</span> Constitution of a corporation

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<span class="mw-page-title-main">S corporation</span> US tax term for a type of company

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<i>Kabushiki gaisha</i> Company with limited liability established under Japanese law

A kabushiki gaisha or kabushiki kaisha, commonly abbreviated K.K. or KK, is a type of company defined under the Companies Act of Japan. The term is often translated as "stock company", "joint-stock company" or "stock corporation". The term kabushiki gaisha in Japan refers to any joint-stock company regardless of country of origin or incorporation; however, outside Japan the term refers specifically to joint-stock companies incorporated in Japan.

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<span class="mw-page-title-main">Nevada corporation</span> Corporation incorporated under Chapter 78 of the Nevada Revised Statutes of the U.S. state of Nevada

A Nevada corporation is a corporation incorporated under Chapter 78 of the Nevada Revised Statutes of the U.S. state of Nevada. It is significant in United States corporate law. Nevada, like Delaware, is well known as a state that offers a corporate haven. Many major corporations are incorporated in Nevada, particularly corporations whose headquarters are located in California and other Western states.

<span class="mw-page-title-main">Corporate tax in the United States</span>

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% following 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.

<span class="mw-page-title-main">United States corporate law</span> Overview of United States corporate law

United States corporate law regulates the governance, finance and power of corporations in US law. Every state and territory has its own basic corporate code, while federal law creates minimum standards for trade in company shares and governance rights, found mostly in the Securities Act of 1933 and the Securities and Exchange Act of 1934, as amended by laws like the Sarbanes–Oxley Act of 2002 and the Dodd–Frank Wall Street Reform and Consumer Protection Act. The US Constitution was interpreted by the US Supreme Court to allow corporations to incorporate in the state of their choice, regardless of where their headquarters are. Over the 20th century, most major corporations incorporated under the Delaware General Corporation Law, which offered lower corporate taxes, fewer shareholder rights against directors, and developed a specialized court and legal profession. Nevada has attempted to do the same. Twenty-four states follow the Model Business Corporation Act, while New York and California are important due to their size.

<span class="mw-page-title-main">Benefit corporation</span> Type of for-profit entity

In business, a benefit corporation is a type of for-profit corporate entity whose goals include making a positive impact on society. Laws concerning conventional corporations typically do not define the "best interest of the corporation", which has led some to believe that increasing shareholder value is the only overarching or compelling interest of a corporation. Benefit corporations explicitly specify that profit is not their only goal. Their activities may or may not differ much from traditional corporations. An ordinary corporation may change to a benefit corporation merely by stating in its approved corporate bylaws that it is a benefit corporation.

References

  1. Goldmark & White; Godfrey Goldmark; Frank White (1913). White and Goldmark on non-stock corporations. New York Public Library: Baker, Voorhis. p. 3.
  2. http://www.lawforchange.org/NewsBot.asp?MODE=VIEW&ID=2346
  3. 1 2 "Cato" (PDF). The Washington Post. Retrieved 23 September 2023.
  4. "Virginia SCC - Virginia Nonstock Corporations". www.scc.virginia.gov. Retrieved 17 July 2023.
  5. "Chapter 21. - Title 15 - CORPORATIONS AND UNINCORPORATED ASSOCIATIONS". www.legis.state.pa.us. Retrieved 17 July 2023.
  6. "Delaware Code Online".
  7. "What is a Non-Stock Corporation? | Harvard Business Services".
  8. "Statute | Kansas State Legislature".
  9. "Laws - Statute Text".
  10. 1 2 "Title 15".