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Being a separate "entity" (like an "artificial person") is the hallmark of the corporate form. Being an "entity" means that the corporation is not tied to any one person or group of people (like a partnership or a sole proprietorship), but exists separately from its officers, directors, and shareholders as a distinct form.
The several advantages of a the corporate form may help us to map out why the corporate form is considered a separate entity or an "artificial person" under the law:
- Limited Liability: The corporation is treated as a separate entity under the law in part because it can incur its own debts and liabilities. This means that if you slipped and fell in a Walmart store, for example, you could sue Walmart itself (the corporation), and not the individual officers of Walmart. Walmart the corporation would be responsible for any judgments. The board of directors, officers, and shareholders would not be personally liable, except under rare circumstances called "piercing the veil," where the owner is not respecting the corporate form.
- The fact that you can sue a corporation may seem strange (because usually only PEOPLE can be sued), but the limited liability aspect of the corporate form is actually very important because it encourages the board of directors to make candid and risky business judgments, and it encourages shareholders to invest in the corporation. This ensures involvement, innovation, and good business strategies among people who might otherwise be scared away by lawsuits. It keeps our economy going.
- Continuity: Because the corporate form is a separate entity, it can survive its founders, its shareholders, and its board of directors, and is NOT tied to the life of any one person. This creates continuity for investors and employees and allows the business to keep going, uninterrupted and without fear of liquidation. This is not so with other business forms such as a partnership. Thus, the corporation is treated as a separate person under the law so that it can exist independent of individual people.
- Limited Rights as a "Person:" Because of these two main facets of the corporate form, several rights that we would consider to be individual rights have been given to corporations. For example, corporations can own property and other assets, can buy, sell, or lease property, and have very broad commercial rights so that the corporation can conduct business independent of an individual person and maintain continuity. Because corporations can own assets, they can pay off their debts, thus, it's also ties to limited liability. Corporations also have limited noncommercial rights like the right not to incriminate one's self which goes along with being able to be sued. Likewise, corporations have limited fourth amendment rights against searches and seizures and limited First Amendment rights (although this is broadening), which are interwoven with the corporation's ability to own property and incur debt. This also continues to encourage corporate business decisions, although some doubt the latest reach of first amendment rights in Citizens United v. FEC, the latest Supreme Court case on this issue. .
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What is created by operation of law in corporation?
One thing created by operation of law in a corporation is the separate legal entity, which means the corporation is considered a legal "person" distinct from its owners. This allows the corporation to enter into contracts, sue and be sued, and own property in its own name. Additionally, the bylaws of a corporation are another key aspect created by operation of law, outlining how the corporation will be governed and managed.
What is an example of an artificial legal person?
Entity (such as a firm) other than a natural person (human being) created by law and recognized as a legal entity having distinct identity, legal personality, and duties and rights. Also called juristic person or legal person. See also body corporate.
What does the legal term 'natural person' mean in corporation law?
Natural person refers to a human being as opposed to a legally-created entity (Corporation, Limited Liability Company, General Partnership, Limited Partnership, etc.).Even we can define them as "A human being that has the capacity for rights and duties". Note that the word capacity means the ability, but not the obligation for rights and duties.
A person who was not a free person and was considered property?
This the typical definition of a slave.
At what age are you considered and adult in Egypt?
In Egypt, a person is considered an adult at the age of 18.
Can a corporation be a partner in a partnership?
Yes. A corporation is an artificial person but is a person according to the law and thus can be a partner in a partnership.
What does it mean when someone says that a corporation is an artificial person created by law?
It basically means that for certain legal purposes, a corporation is similar to a person. For example, a corporation can own property, and have certain responsibilities.
What does it mean when someone says a corporation is an artificial person created by law?
It basically means that for certain legal purposes, a corporation is similar to a person. For example, a corporation can own property, and have certain responsibilities.
One person forms corporation and holds all the shares are they considered the owner of the corporation?
Yes.
A contract between a business and a state recognizing the business as an artificial person is known as?
This is sometimes known as a Corporate Charter & other times known as the Articles of Incorporation.
Can one business invest company money into another business?
A corporation is often referred to as an 'artificial person.' Thus, speaking in general terms only, a corporation can do whatever an individual person can do. In principle (although this might vary from jurisdiction to jurisdiction), there is no general prohibition against a corporation investing in another corporation, in the same way that there is no general principle against an individual person investing in a corporation. For legal advice in any such matter, however, please consult a lawyer.
What is an artificial florist?
An artificial florist is a person who makes or sells artificial flowers.
Where person get oxygen for artificial respiration?
an PERSON GETS ARTIFICIAL OXYGEN FROM THE CYLINDER that are attached to the hospitals.
Do you own your incorporation?
One does not own an incorporation. Incorporation is the process by which a corporation is created. In fact, one does not really own a corporation either. One may own shares issued by a corporation, perhaps even all of the shares, but ownership of even all the shares of a corporation does not mean that you own the corporation. Ownership of shares of a corporation merely gives you certain rights. These include the right to vote in the election of directors and the right to receive any dividends. A corporation exists independently from the shareholders, and is often referred to as an artificial person.
What is an artificial person?
An artificial person is an alternative term for a legal person, an organization which holds some of the rights of an individual under the law.
What is artificial person?
An artificial person is an alternative term for a legal person, an organization which holds some of the rights of an individual under the law.
What is created by operation of law in corporation?
One thing created by operation of law in a corporation is the separate legal entity, which means the corporation is considered a legal "person" distinct from its owners. This allows the corporation to enter into contracts, sue and be sued, and own property in its own name. Additionally, the bylaws of a corporation are another key aspect created by operation of law, outlining how the corporation will be governed and managed.
