Product Code Database
A company is a legal entity that represents an association of with a specific, shared objective, such as the earning of profit or the benefit of society. Depending on jurisdiction, companies can take on various forms, such as voluntary associations, nonprofit organizations, business entities, financial entities, , and educational institutions. Across jurisdictions, companies have generally evolved to have certain common legal features, including separate legal personality, limited liability, transferable shares, investor ownership, and a Management.
Depending on jurisdiction, the term "company" may or may not be synonymous with corporation, partnership, firm and society. Companies are governed by Corporate law, which is also known as corporate law in some jurisdictions. Incorporated companies are created by and registered with the state, whereas unincorporated companies are not.
When a company closes, it may need to be Liquidation to avoid further legal obligations. Companies may associate and collectively register themselves as new companies known as , collections of parent and subsidiary corporations.
the Corporation itself is onely in abstracto, and resteth onely in intendment and consideration of the Law; for a Corporation aggregate of many is invisible, Immortality, & resteth only in intendment and consideration of the Law; and therefore it cannot have predecessor nor successor. They may not commit treason, nor be outlawed, nor excommunicate, for they have no Soul, neither can they appear in person, but by Lawyer. A Corporation aggregate of many cannot do fealty, for an invisible body cannot be in person, nor can swear, it is not subject to imbecilities, or death of the natural, Human body, and divers other cases.In 1776, Adam Smith wrote in the Wealth of Nations that mass corporate activity could not match private entrepreneurship, because people in charge of "other people's money" would not exercise as much care as they would with their own.A Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776) Book V, ch 1, para 107
In 1843, William Gladstone took chairmanship of a Parliamentary Committee on Joint Stock Companies, which led to the Joint Stock Companies Act 1844.Report of the Parliamentary Committee on Joint Stock Companies (1844) British Parliamentary Papers vol VII
The Wall Street crash of 1929 saw the total collapse of stock market values, as shareholders realized that corporations had become overpriced. They sold shares en masse, meaning many companies found it hard to get finance. The result was that thousands of businesses were forced to close, and they laid off workers. Because workers had less money to spend, businesses received less income, leading to more closures and lay-offs. This downward spiral began the Great Depression.AA Berle, 'For Whom Corporate Managers Are Trustees: A Note' (1932) 45(8) Harvard Law Review 1365, 1372. See also the Berle-Dodd debate. This led directly to the New Deal reforms of the Securities Act of 1933 and Securities and Exchange Act of 1934. A new Securities and Exchange Commission was empowered to require corporations disclose all material information about their business to the investing public.AA Berle, 'Corporate Powers As Powers in Trust' (1931) 44 Harvard Law Review 1049, EM Dodd, 'For Whom Are Corporate Managers Trustees?' (1932) 45 Harvard Law Review 1145 and AA Berle, 'For Whom Corporate Managers Are Trustees: A Note' (1932) 45 Harvard Law Review 1365
After World War II, a general consensus emerged that directors were not bound purely to pursue "shareholder value" but could exercise their discretion for the good of all stakeholders, for instance by increasing wages instead of dividends, or providing services for the good of the community instead of only pursuing profits, if it was in the interests of the enterprise as a whole.e.g. AP Smith Manufacturing Co v Barlow, 13 N.J. 145, 98 A.2d 581, 39 ALR 2d 1179 (1953) and Shlensky v Wrigley, 237 N.E. 2d 776 (Ill. App. 1968) However, different states had different corporate laws. To increase revenue from corporate tax, individual states had an incentive to lower their standards in a "race to the bottom" to attract corporations to set up their headquarters in the state, particularly where directors controlled the decision to incorporate. "Charter competition", by the 1960s, had led Delaware to become home to the majority of the largest US corporations. This meant that the case law of the Delaware Chancery and Supreme Court became increasingly influential.
During the 1980s, a huge takeover and merger boom decreased directors' accountability. To fend off a takeover, courts allowed boards to institute "poison pills" or "shareholder rights plans", which allowed directors to veto any bid – and probably get a payout for letting a takeover happen. More and more people's retirement savings were being invested into the stock market, through Pension fund, life insurance and mutual funds. This resulted in a vast growth in the asset management industry, which tended to take control of voting rights. Both the financial sector's share of income, and executive pay for chief executive officers began to rise far beyond real wages for the rest of the workforce. The Enron scandal of 2001 led to some reforms in the Sarbanes-Oxley Act (on separating auditors from consultancy work). The 2008 financial crisis led to minor changes in the Dodd-Frank Act (on soft regulation of pay, alongside derivative markets). However, the basic shape of corporate law in the United States has remained the same since the 1980s.
- '[...] the word having been used in reference to trade guilds from late 14c.'
The usage of the term company to mean "business association" was first recorded in 1553,
Compare:
- 'From late 14c. as "a number of persons united to perform or carry out anything jointly," which developed a commercial sense of "business association" by 1550s, the word having been used in reference to trade guilds from late 14c.'
and the abbreviation "co." dates from 1769.
Compare:
- "1759 Compl. Let.-writer (ed. 6) London: Printed for Stanley Crowder, and Co."
Compare:
- 'by 1670s as an abbreviation of company in the business sense, indicating the partners in the firm whose names do not appear in its name. Hence and co. to indicate "the rest" of any group (1757)'.
In English law, a company is a body corporate or corporation company registered under the Companies Acts or under similar legislation.
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