Legal Badge

Corporate law (also “company” or “corporations” law) is the study of how shareholders, directors, employees, creditors, and other stakeholders such as consumers, the community and the environment interact with one another. Corporate law is a part of a broader companies law (or law of business associations). Other types of business associations can include partnerships (in the UK governed by the Partnership Act 1890), or trusts (like a pension fund), or companies limited by guarantee (like some community organizations or charities). Under corporate law, corporations of all sizes have separate legal personality, with limited liability 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. Corporate law deals with firms that are incorporated or registered under the corporate or company law of a sovereign state or their subnational states. The four defining characteristics of the modern corporation are:[1]
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)Shares (if the corporation is a public company, the shares are traded on a stock exchange, such as the London Stock Exchange, New York Stock Exchange, Euronext in Paris or BM&F Bovespa in Sao Paulo)Delegated management; the board of directors delegates day-to-day management of the company to executives In many developed countries outside of the English speaking world, company boards are appointed as representatives of both shareholders and employees to “codetermine” company strategy.[2] Corporate law is often divided into corporate governance (which concerns the various power relations within a corporation) and corporate finance (which concerns the rules on how capital is used). A major contributor to company law in the UK is the Companies Act 2006.