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Corporations Other: A Comprehensive Guide to Their Legal Definition
Definition & Meaning
Corporate law governs the formation, operation, and dissolution of corporations. A corporation is a legal entity recognized by the state, allowing it to act as a single "person" distinct from its owners, known as stockholders. This separation means that a corporation can enter contracts, sue, and be sued independently. Corporations are subject to specific tax regulations, often facing lower tax rates than individuals. They also enjoy perpetual existence, meaning they continue to exist regardless of changes in ownership or management. The creation and regulation of corporations are primarily governed by state law, with many states adhering to the Model Business Corporation Act.
Table of content
Legal Use & context
Corporate law is a crucial area of legal practice that intersects with commercial and contract law. It is relevant in various legal contexts, including:
Formation of corporations
Corporate governance
Compliance with federal and state regulations
Dispute resolution among stakeholders
Users can often manage basic corporate formation and compliance tasks using legal templates from US Legal Forms, which are drafted by experienced attorneys.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Here are two examples of how corporate law applies:
A tech startup incorporates in Delaware to take advantage of favorable business laws and tax rates. This allows them to raise capital by issuing shares to investors.
A manufacturing company faces a lawsuit for breach of contract. As a corporation, it can defend itself in court, separate from its owners' personal assets. (hypothetical example)
Relevant laws & statutes
Key laws that affect corporations include:
Securities Act of 1933: Regulates the issuance and sale of corporate securities.
Model Business Corporation Act: Provides a framework for corporate governance and operations in many states.
State-by-state differences
Examples of state differences (not exhaustive):
State
Key Differences
Delaware
Known for business-friendly laws and a specialized court for corporate disputes.
California
Has stricter regulations on corporate governance and environmental compliance.
Texas
Offers favorable tax incentives for corporations and less regulatory oversight.
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Key Differences
Corporation
A legal entity distinct from its owners.
Provides limited liability to stockholders.
Partnership
A business owned by two or more individuals.
Partners share liability and profits without the legal separation of a corporation.
Sole Proprietorship
A business owned and operated by one person.
The owner has unlimited liability and is personally responsible for debts.
Common misunderstandings
What to do if this term applies to you
If you are considering forming a corporation, follow these steps:
Determine the best state for incorporation based on your business needs.
Choose a unique name for your corporation that complies with state regulations.
File the necessary formation documents with the state and pay the required fees.
Consider using US Legal Forms for templates to simplify the process.
If your situation is complex, consult with a legal professional for tailored advice.
Find the legal form that fits your case
Browse our library of 85,000+ state-specific legal templates.