Corporate Law Basics

Study Notes

Corporate law, also known as company law or corporation law, deals with the formation, governance, and dissolution of corporations.
It regulates the rights and obligations of companies, shareholders, directors, and employees.

Publicly Held Corporations: Shares are traded on a public stock exchange, and anyone can buy and sell shares.
Private Corporations: Shares are not publicly traded, and ownership is limited to a small group of individuals.
Non-Profit Corporations: Organized for charitable, educational, or religious purposes, with profits going back to the organization.
Close Corporations: A small, privately held corporation with a limited number of shareholders.

Shareholders: Owners of the company, entitled to vote on major decisions and receive dividends.
Board of Directors: Elected by shareholders to oversee the company's management and make major decisions.
Officers: Appointed by the board of directors to manage the company's day-to-day operations.
Employees: Hired by the company to perform specific tasks and duties.

Duty of Care: Directors and officers must act with the care of an ordinary prudent person.
Duty of Loyalty: Directors and officers must act in the best interests of the company.
Business Judgment Rule: Directors and officers are protected from liability for business decisions made in good faith.

Articles of Incorporation: A document filed with the state to establish the corporation.
Corporate Bylaws: A document outlining the company's internal governance and procedures.

Stock: Represents ownership in the company, and can be issued to raise capital.
Bonds: Debt securities issued to raise capital, with interest paid to bondholders.
Dividends: Payments made to shareholders from the company's profits.

Voluntary Dissolution: The company's shareholders and directors decide to dissolve the corporation.
Involuntary Dissolution: The corporation is dissolved by a court order, usually due to fraud or other illegal activities.
Winding Up: The process of liquidating the company's assets and distributing them to creditors and shareholders.

Deals with the formation, governance, and dissolution of corporations
Regulates rights and obligations of companies, shareholders, directors, and employees

Publicly Held Corporations: Shares traded on public stock exchange, open to public buying and selling
Private Corporations: Shares not publicly traded, ownership limited to small group of individuals
Non-Profit Corporations: Organized for charitable, educational, or religious purposes, profits go back to organization
Close Corporations: Small, privately held corporation with limited number of shareholders

Shareholders: Owners of company, entitled to vote and receive dividends
Board of Directors: Elected by shareholders to oversee management and make major decisions
Officers: Appointed by board to manage day-to-day operations
Employees: Hired by company to perform specific tasks and duties

Duty of Care: Directors and officers must act with care of an ordinary prudent person
Duty of Loyalty: Directors and officers must act in best interests of company
Business Judgment Rule: Directors and officers protected from liability for business decisions made in good faith

Articles of Incorporation: Document filed with state to establish corporation
Corporate Bylaws: Document outlining internal governance and procedures

Stock: Represents ownership in company, issued to raise capital
Bonds: Debt securities issued to raise capital, with interest paid to bondholders
Dividends: Payments made to shareholders from company's profits

Voluntary Dissolution: Company's shareholders and directors decide to dissolve corporation
Involuntary Dissolution: Corporation dissolved by court order, usually due to fraud or illegal activities
Winding Up: Process of liquidating company's assets and distributing them to creditors and shareholders