Corporate Law Basics

Definition and Scope

• 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.

Types of Corporations

• 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.

Corporate Structure

• 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.

Corporate Governance

• 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.

Corporate Formation

• 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.

Corporate Finance

• 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.

Corporate Dissolution

• 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.

Corporate Law

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

Types of Corporations

• 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

Corporate Structure

• 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

Corporate Governance

• 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

Corporate Formation

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

Corporate Finance

• 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

Corporate Dissolution

• 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