slide1 n.
Skip this Video
Loading SlideShow in 5 Seconds..
Corporations PowerPoint Presentation
Download Presentation

Loading in 2 Seconds...

play fullscreen
1 / 16

Corporations - PowerPoint PPT Presentation

  • Uploaded on

10. Corporations. History & Nature of Corporations Organizational and Financial Structure of Corporations Management of Corporations. McGraw-Hill/Irwin Business Law, 13/e. © 2007 The McGraw-Hill Companies, Inc. All rights reserved. 10. Corporations. Shareholders’ Rights & Liabilities

I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
Download Presentation

PowerPoint Slideshow about 'Corporations' - yehuda

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.

- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript



History & Nature of Corporations

Organizational and Financial Structure of Corporations

Management of Corporations

McGraw-Hill/Irwin Business Law, 13/e

© 2007 The McGraw-Hill Companies, Inc. All rights reserved.




Shareholders’ Rights & Liabilities

Securities Regulation

Legal & Professional Responsibilities of Auditors, Consultants, and Securities Professionals

McGraw-Hill/Irwin Business Law, 13/e

© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

history and nature of corporations

History and Nature of Corporations









“In every era, society must strike the right balance between the freedom businesses need to compete for a market share and to make profits and the preservation of family and community values.”

Hillary Clinton, It Takes a Village (1996)

learning objectives
Learning Objectives
  • History of corporations
  • Classifications of corporations
  • Regulation of for-profit corporations
  • Regulation of nonprofit corporations
  • Regulation of foreign and alien corporations
  • Piercing the corporate veil

41 - 5


The Corporation As a Person

  • In 1886, the private corporation gained legal status as a "natural person" under the U.S. Constitution with the associated protections
  • Corporations today have legal status as a person, specific authority for operation and management, limited liability for owners, easy transferability of an owner’s interest, and the obligation to pay taxes
    • See Fig. 1, page 969

41 - 6


Classes of U.S. Corporations

  • By purpose:
    • For-profit corporations
    • Not-for-profit corporations
  • By ownership:
    • Publicly held (shareholders)
    • Close (a few shareholders)
      • Subchapter S
    • Government-owned corporations

41 - 7


Classes of U.S. Corporations

  • By origin – a company is:
    • Domestic in the state in which the company incorporates
    • Foreign in all other states in which a company operates
    • Alien in all countries other than the country in which it incorporated

41 - 8


Federal Regulation of Firms

  • Federal government has power to regulate interstate commerce under the Commerce Clause of the U.S. Constitution
  • Due Process Clause of Fourteenth Amendment interpreted to allow a state to exercise jurisdiction over foreign corporation if firm has sufficient minimum contacts with a state
    • “Doing business” will allow jurisdiction, but minimum contacts may be lesser activity

41 - 9


Doing Business Within a State

  • Not doing business:
    • Soliciting orders, sales through independent contractors, owning property for investment, conducting isolated transaction, maintaining bank account for collection purposes
  • Doing business:
    • Maintaining an office, contracts with local businesses, using real property, maintaining inventory for order fulfillment, performing service activities

41 - 10


Piercing the Corporate Veil

  • Corporation law provides an imaginary wall – the corporate veil – between a corporation and its shareholders to protect owners from personal liability for corporation’s actions
  • A court may pierce the corporate veil to reach individual shareholders if the shareholders dominate the corporation (alter ego) or the corporation is used for an improper purpose
    • See Fig. 2, page 979

41 - 11

test your knowledge
Test Your Knowledge
  • True=A, False = B
    • A corporation is a fictitious, but legal, person.
    • Corporations may be classified only in terms of ownership.
    • Under the Commerce Clause, states have the power to regulate interstate commerce.
    • Texas Shipping, Inc. owns buildings and has employees in Houston, TX and New Orleans, LA, but “does business” only in Texas.

41 - 12

test your knowledge1
Test Your Knowledge
  • True=A, False = B
    • A state organized under Kansas corporate law is a domestic company when it operates within the state of Kansas and a foreign company in any state other than Kansas.
    • Cole Inc. is owned by two people. Each owner built a home with money obtained by a loan from State Bank to Cole Inc. The corporate shield provides absolute protection to both owners from personal liability for repayment of the loans.

41 - 13

test your knowledge2
Test Your Knowledge
  • Multiple Choice
    • A state law that regulates business activities of a foreign corporation is constitutional if :
      • (a) It serves a legitimate state interest
      • (b) The legitimate state interest outweighs the burden on interstate commerce
      • (c) It is the most burdensome means of promoting that interest
      • (d) All of the above
      • (e) A and B, but not C

41 - 14

test your knowledge3
Test Your Knowledge
  • Multiple Choice
    • Which of the following activities meet the requirements for doing business in a state?
      • (a) Owning personal property as investment
      • (b) Maintaining a bank account for collection purposes
      • (c) Maintaining a storefront for product sales
      • (d) Soliciting product orders through a catalog
      • (e) All of the above

41 - 15

thought questions
Thought Questions
  • Does an online stock transaction meet the sufficient minimum contacts criteria of the International Shoe ruling? In other words, if a consumer is injured by an online stock trade, could the consumer sue the company in her or her state court system?

41 - 16