By David Hobbs
The word “corporation” derives from the Latin term “corpus” meaning body.
Roman law recognized a range of corporate entities. Churches and local governments incorporated to exist in perpetuity (indefinitely).
Some say the oldest commercial corporation is Stora Kopparberg mining community in Falun, Sweden who obtained its corporate status by charter granted by King Magnus Eriksson in 1347.
During medieval times people formed guilds and livery companies.
European nations granted charters to companies to lead colonial ventures like the Dutch East India Company or Hudson’s Bay Company. Investors were issued paper certificates as proof of share ownership. The company charters gave limited liability to investors to limit their risk.
In England the government created corporations under Royal Charter or an Act of Parliament with the grant of a monopoly over a certain territory. On December 31, 1600 Queen Elizabeth granted the East India Company a 15 year monopoly to trade to and from the East Indies and Africa. It’s first stock offering in 1713-1716 raised £418,000. Similar chartered companies were granted charters to trade in other parts of the world.
In 1843 William Gladstone became chairman of a Parliamentary Committee which led to the English Joint Stock Companies Act of 1855. The Companies Act was passed in 1862. In Salomon v. Salomon the House of Lords confirmed the separate legal personality of the company, distinct from its shareholders.
Thereafter emerged holding companies and corporate mergers. Anti-trust laws were enacted to prevent anti competitive practices.
In the 20th Century there was a proliferation of laws allowing for the creation of corporations by the process of registration. Many countries with state owned corporations moved to privatization.
Corporations now file articles of incorporation with a government department setting out the general nature of the corporation, the amount of stock it is authorized to issue and the names and addresses of directors. The directors create bylaws which govern internal procedures. The corporation is legally recognized as a person. Corporations may issue stock and be for profit or not for profit. Not for profits generally do not issue stock and have members, not shareholders. Shareholders and members vote. Shareholders and members have the benefit of limited liability. Shareholders and members elect board members or directors to oversee management of the enterprise. Annual reports and incorporation applications are filed online. The corporation may exist in perpetuity so long as it meets its legal and regulatory requirements preventing the regulator from striking the corporation from the register.