corporation law [final]
TRANSCRIPT
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What is a Corporation?
A corporation is an artificial being created byoperation of law, having the right of succession and
the powers, attributes and properties expressly
authorized by law or incident to its existence. (Sec. 2,
Corporation Code)
"It is an artificial being, invisible, intangible and
existing only in contemplation of law.
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Collection of many individuals
Special denomination
Perpetual succession
Vested by the Policy of Law
Law treats it as thought were a person by process of
fiction
Artificial person distinct and separate from its
individual stock holders
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Roman Times
Stretches back to Roman times.
Corporations were solely able to be establishedthrough an act of the state (ex. Act of Parliament)
Corporation
Corpus: body of people
Justinian (527565): Roman Law recognized a range ofcorporate entities under the names universitas, corpusor collegium.
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Roman Times
To sue and be sued
Perform legal acts through representatives
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Medieval Times
Churches
Local Governments
Business through common law constructs
Partnerships
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The First Corporations
Europe
Not-for-profit entities
Build institutions for the public good.
Duties overseen by the government
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17thCentury
Money became a major focus of corporations.
Used to fund colonial expansions.
East India Company
British
Royal Charter of 1600
Ruled over a fifth of the world's population with a
private army of a quarter of a million.
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DUTCH EAST
INDIA COMPANY
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Verenigde Oostindische Compagnie or VOC
Trade, exploration, colonization
1602-1800Monopoly: spice trade
Semi-governmental powers: wars, prosecution, treaty
negotiation, colonies
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HISTORY AND GROWTH
16TH
Century spice trade in Europe
Portugese dominationdecline of supplyincrease
in prices
Portugal and Spain united in 1580
Dutch entered the industry (ongoing war between
Portugal and Spain)
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HISTORY AND GROWTH
1598- Dutch trading ships
1599- Jacob van Necks fleetSpice Islands
(Moluccas of Indonesia)
1602- creation of United East Indies Company (Dutch
East Indies Company)
Purpose: stabilize profits in Dutch spice trade and form
monopoly
Powers: build forts, keep armies, make treaties
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HISTORY AND GROWTH
1620sfurther colonization of Indonesian islands and
presence of Dutch plantations growing cloves and
nutmeg
Gold & silvertrade surplus with European countries
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HISTORY AND GROWTH
1652- Cape of Good Hope Southern Africasupplies
to ships sailing to eastern Asia Cape Colony
Trading posts: Persia, Bengal, Malacca, Siam, Formosa,
Malabar
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DECLINE
Asian spices
1666 - loss of silk trade with China
1670 - decrease in trading with Japan
1780war in Englandfinancial troubles
18thCenturydecline of demand of Asian spices
Companys survival due to Dutch govt support
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DECLINE
Charter was renewed by Dutch Government
Companys power reduced
Employee and headquarters reduction
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ORGANIZATION
Complex organizational structure
2 Types of Shareholders
Participantennon-managing partners
Bewindhebbersmanaging partners
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ORGANIZATION
6 Chambers
Amsterdam
Delft
Rotterdam
Enkhuizen
Middleburg
Hoorn
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Importance
Complex business modeltodays businesses
Early form of limited-liability company
Highly organized
First to establish to monopoly over spice trade
Worlds first multinational corporation
Expanded European ideas and technology
Brought ideas & technology to Asia
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Hudsons Bay CompanyFrench: Company de la Baie d Hu
- commonly referred to as The Bay one of the oldestcommercial corporations in the world
- fur trading business
- incorporated by English Royal Charter in 1670 as TheGovernor and Company of Adventures of England trading intoHudsons Bay
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c. British East IndiaCompany
- originally chartered as the Governor and Company ofMerchant of London Trading into the East Indies in 1600,more properly called the Honourable East India Company.
- it first entered the spice trade in the form of an earlycapitalist venture
- the grandest society of merchants in the universe
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- During its heyday, the EIC did not only establishedtrade through Asia and the Middles East but also
effectively became the ruler of territories vastly larger
than the United Kingdom itself.
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d. South Sea Company
- a British joint-stock company founded in 1711
-encouraged the fishing business
-officially The Governor and Company of the
merchants of Great Britain
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e. British South AfricaCompany
- Originally completed to exploit the expected mineralwealth of Mashonaland
- Received a Royal Charter in 1889 modelled on that of
the British East India Company.
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American Revolution
The American Revolutionary War began in 1776 to overthrow Britishcolonisation
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Ending colonial monopoly
After Independence, American corporations, like theBritish companies before them, were chartered to perform
specific public functions
Britain protected its textile industry and forced the Indianmarket open.
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RISE OF PRIVATEECONOMY
- result of classical liberalism and laissez faireeconomic theory due to a resolution in economiesled by Adam Smith
- Laissez-faire (let them do, let it be)
- In 1776, Adam Smith wrote the Wealth of Nations
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Corporate personhood
Joint Stock Companies Act of 1844
Limited Liability Act of 1855
* a corporation is a natural person under the law.
* no state shall deprive any person of life, liberty or property adopted to protectemancipated slaves in the hostile South-was used ton defend corporations and strikedown regulations.
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Free Trade
*unchecked capitalism
*In US, antitrust laws to break monopolies were brought
it.
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Rise of Private Economy
Result of classical liberalism and laissez faireeconomic theory. (Adam Smith)
Transition from government/guild affiliated entities to
public and private economic entities.
United States
mid-19thcentury
focused on protection of the public interest.
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Rise of Private Economy
Corporate charters were closely regulated by thestates.
Act of legislation was needed.
Greater corporate registration revenues available byproviding more permissive corporate laws.
New Jersey was the first state to adopt an "enabling"corporate law followed by Delaware.
1819, the U. S. Supreme Court granted corporationsa plethora of rights.
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Rise of Private Economy
Corporation as an "artificial person", possessing bothindividuality and immortality.
Joint Companies Act 1844
Limited Liability Act of 1855
Corporate Personhood
1844: Act in Britain allowing them to define their ownpurpose.
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Rise of Private Economy
1855: shareholders were awarded limited liability.1886: landmark decision by a US court recognized thecorporation as a 'natural person' under law.
The 14th amendment to the Constitution: 'no state shalldeprive any person of life, liberty or property
Free Trade
Antitrust Laws in the US
Taxation and tariffs were raised
State regulation crept in
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State Intervention
Welfare States: labor movement, 1930s depression,World War II.
Post - WWII: independence in former Western
colonies
Aggressive protection of domestic industry.
Foreign Investment Restrictions
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State Intervention
1950 - 1980: Economic Orthodoxy
1960: Social activism in the US
Environmental and labor standards
Neoliberal Era
1970: Milton Friedman and the Chicago School
Ultra free-market ideas based on deregulation andprivatization that harked back to the laissez-faire capitalism ofthe 19th century (hence the term 'neoliberalism')
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State Intervention
1980: fought to regain control of both political agendaand the court system.
1982 Debt Crisis:
US its chance to dominate the world economy
rich nations to re-subordinate the global South through'structural adjustment' via the World Bank and the
International Monetary Fund.
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State Intervention
Globalization:
The power of transnational corporations is greater than
that of many nation-states.
NAFTA
WTO
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Ownership and Control
Formation:
Historically, corporations were created by a charter
granted by government.
At present, corporations are usually registered with the
State, province or national government and regulatedby the laws enacted by that government.
A corporation files articles of incorporation
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Ownership and Control
Nature of the corporationAmount of stock it is authorized to use
Names and addresses of the directors
Once the articles are approved, directors make the bylaws.
Naming
Have a distinct name
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Dartmouth College vs.Woodland
Landmark decision from the United States Supreme CourtApplication of the Contract Clause of the United StatesConstitution to private corporations.
The case arose when the president of Dartmouth College wasdeposed by its trustees.
Attempted to force the college to become a public institutionand thereby place the ability to appoint trustees in the hands ofthe governor.
The Supreme Court upheld the sanctity of the original charter ofthe college, which pre-dated the creation of the State.
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Concession Theory
Incorporation is a state-conferred privilegeNOTpurely private contracting
Came about during the early history of corporations, whencorporations were created by special charter
Tayag vs. Benguet Consolidated, Inc.
A corporation owes its life to the State
A corporation cannot exist without the imprimatur of the State actingaccording to law
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Enterprise entity theory
Legal fiction alone does notcreate a corporateentity; corporation takes its being from the reality ofthe underlying enterprise
When the entity is challenged in some way, itsexistence, extent and consequences may bedetermined by the actual existence and operationsof the underlying enterprise
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Enterprise entity theory
Partnership personality becomes reality when two ormore persons decide to contribute money, property orindustry to a common fund with the intention to divideprofits
Meant to cover situations where courts either erectedcorporate personality which the State had not granted, ordisregarded corporate personality where the State hadgranted it