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)
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?
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What is the right of succession in corporations?
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Why is a corporation considered a creature of enumerated powers, attributes, and properties?
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What is the doctrine of corporate entity?
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What are the consequences of the doctrine of corporate entity? (Select all that apply)
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What is the purpose of determining the nationality of corporations?
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What are the tests of nationality of a corporate entity? (Select all that apply)
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What is the 'place of incorporation test'?
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What is the 'control test'?
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What is the nationality of a corporation?
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What is the residence of a corporation?
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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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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.