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What Are Corporations Public? A Comprehensive Legal Overview
Definition & Meaning
A corporation is a legal entity established under state law, recognized as a separate "person" from its owners, known as stockholders. This means a corporation can enter into contracts, sue, and be sued independently. Corporate law governs the formation, operation, and dissolution of corporations, linking it closely to commercial and contract law. Corporations enjoy certain advantages, such as limited liability for their owners and perpetual existence, meaning they continue to exist regardless of changes in ownership or management.
Table of content
Legal Use & context
Corporations play a significant role in various legal contexts, particularly in business law. They are commonly involved in:
Commercial transactions
Contractual agreements
Securities regulation, particularly under the Securities Act of 1933
Federal and state compliance for specific industries, such as communications and public transportation
Users can often manage corporate formation and compliance 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:
Example 1: A technology startup incorporates in Delaware to benefit from favorable corporate laws. They issue shares to raise capital and limit the personal liability of their founders.
Example 2: A public transportation company must comply with federal regulations, including licensing and safety standards, to operate legally in multiple states. (hypothetical example)
Relevant laws & statutes
Key statutes relevant to corporations include:
Securities Act of 1933: Regulates the issuance and sale of corporate securities.
Model Business Corporation Act: A guideline followed by many states for corporate formation and governance.
State-by-state differences
State
Key Differences
Delaware
Favorable corporate laws and a specialized court for corporate disputes.
California
More stringent regulations for corporate governance and environmental compliance.
Texas
Less regulatory burden and lower fees for incorporation.
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
LLC (Limited Liability Company)
A business structure that combines the pass-through taxation of a partnership with the limited liability of a corporation.
LLCs offer more flexibility in management and fewer formalities than corporations.
Partnership
A business structure where two or more individuals share ownership and profits.
Partners have personal liability, unlike corporate stockholders.
Common misunderstandings
What to do if this term applies to you
If you are considering forming a corporation, start by researching state requirements for incorporation. You can use US Legal Forms to access templates for incorporation documents. If your situation is complex or involves significant investment, consulting a legal professional is advisable to ensure compliance and protection of your interests.
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