Concept and Attributes of a Corporation

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Questions and Answers

What is the statutory definition of a corporation?

A corporation is an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incidental to its existence.

What are the four attributes of a corporation? (Select all that apply)

It is a natural entity

It is a creature of law (correct)

It is an artificial being (correct)

It has right of succession (correct)

What do you mean by an artificial being?

It is the fiction of law which creates the 'person' of the corporation, with the same attributes of an individual with full capacity to enter into contractual relations.

What do you mean by creature of the law?

A corporation cannot come into being by mere consent of the parties; there must be a law granting it. Signup and view all the answers

What is the right of succession in corporations?

The capacity for continuous existence despite the death of replacement of its shareholders. Signup and view all the answers

Why is a corporation considered a creature of enumerated powers, attributes, and properties?

Because it is organized with full powers to undertake any venture and engage in any transaction, provided it does not violate laws, morals, or public policy. Signup and view all the answers

What is the doctrine of corporate entity?

Doctrine of separate juridical personality; a corporation being a juridical person has a personality separate and distinct from the stockholders or members who compose it. Signup and view all the answers

What are the consequences of the doctrine of corporate entity? (Select all that apply)

Constitutional rights Signup and view all the answers

What is the purpose of determining the nationality of corporations?

It serves as a legal basis for subjecting the enterprise or its activities to the laws, economic and fiscal powers, and social and financial policies of the state to which it belongs. Signup and view all the answers

What are the tests of nationality of a corporate entity? (Select all that apply)

Control test Signup and view all the answers

What is the 'place of incorporation test'?

This test holds that a corporation is a national of the country under whose laws it has been organized and registered. Signup and view all the answers

What is the 'control test'?

Under this test, the nationality of a corporation is determined by the nationality of the majority of the stockholders on whom equity control is vested. Signup and view all the answers

What is the nationality of a corporation?

The nationality may be determined by the place of incorporation or control test. Signup and view all the answers

What is the residence of a corporation?

The residence of a corporation is the place of its incorporation. Signup and view all the answers

Study Notes

Concept and Attributes of a Corporation

A corporation is defined as an artificial being established by law, possessing the right of succession along with powers and attributes authorized by law.

Attributes of a Corporation

Key attributes include:
- Artificial being created by law.
- A creature of law requiring legal foundation for existence.
- Holds the right of succession, enabling continuity despite changes in ownership.
- Operates under enumerated powers explicitly granted by law.

Artificial Being

Represents a legal fiction giving a corporation individual-like attributes, allowing engagement in contracts.
Corporations have a distinct personality from their shareholders and other legal entities.
Agents act on behalf of the corporation; they are not personally liable for corporate actions.

Creature of the Law

Corporations require a state grant for formation and cannot exist without legal authorization.
Juridical existence entirely relies on state consent; dissolution can only be enacted by the state.

Right of Succession

This attribute ensures a corporation can outlive its shareholders, maintaining continuity of operation.

Enumerated Powers

Corporations can perform only those actions explicitly permitted by the Corporation Code and related laws, avoiding unlawful or unethical ventures.

Doctrine of Corporate Entity

Establishes that a corporation has a separate legal personality distinct from its owners or members.

Consequences of Corporate Entity Doctrine

Corporations maintain unique characteristics not shared with members, such as:
- Distinct residence and nationality.
- Constitutional rights under the law.
- Criminal liability separate from members.
- Inability to recover for moral damages.

Purpose of Nationality Determination

Evaluates legal jurisdiction for compliance with state laws, economic controls, and financial policies relevant to the corporation’s operations.

Tests of Nationality

The nationality of a corporation can be determined by:
- Place of incorporation test: Based on the country of formation and registration.
- Control test: Based on the nationality of majority stockholders who possess equity control.

Place of Incorporation Test

A corporation's nationality is linked to the jurisdiction in which it was established; foreign corporations operate under non-domestic laws permitting local business activity.

Control Test

Determines nationality by assessing the citizenship of the majority shareholders, who influence corporate governance through board elections.

Nationality of a Corporation

Identified primarily through:
- Place of incorporation.
- Control exerted by shareholders.

Residence of a Corporation

The official residence is determined by its place of incorporation.

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Description

Test your knowledge on the statutory definition and key attributes of a corporation with these flashcards. Understand what defines a corporation as an artificial being and explore its essential characteristics in the legal framework.