Forming Corporations
When people think about forming Corporations, they are taking a big step that will allow them the opportunity to create their own laws about how they are created, and the type of organizational structure that they will have. They also have the power to form agreements of dissolution if their business arrangement is no longer amicable.
Forming Corporations makes people privy to a legal status that is guided by the corporate laws of the State in which they are formed. A corporation is a group of people that have given themselves a lot of power, that they can reign in on to guide their management of their internal affairs with absolute approval authority.
With the forming of Corporations, many people become a legal entity that is required to operate by the by-laws that they create to define the obligations and rights of the various officers of the Corporation, that are elected to their positions by the persons or groups within the organization.
The Corporations must create legal documents to certify their organizational structure, and if this Corporation will be doing business in other States, they must request permission from that State before they begin their business transaction. This request process will be closely monitored by the State government for compliance.
If a Corporation will be selling stock that is regulated by the Securities and Exchange Commission, the those Corporations must follow the securities laws put in place due to recent terrorist activity. All share activity and sales transactions of Corporate stock will have to be divulged to their shareholders on a routine basis, and full disclosure will have to be made to their shareholders too.
The Law states that Corporations are considered people, and as such are subject to lawsuits that any other individual doing business would be subjected to. These Corporations also have the right to sue other people, if they feel like they are wronged in any of their business dealings. The Corporate officers are the ones that will be sued, because they are the people who run the Corporations. The shareholders and investors will not be included in those lawsuits.
The stockholders have the right to sue their Corporations if they want to sell their stock. These derivative suits are a diplomatic way of making the ownership of Corporation stock transferable. When Corporations are formed, it takes on a perpetual life cycle, and will continue to live even though the Officer’s in the Corporation may die at some point during the life cycle of Corporations.
by Nathan.Smarty 19 years ago