A business corporation is a for-profit firm that is incorporated or registered under the corporate or company law of a state.¹ There are four defining characteristics of the modern corporation¹:
- Separate legal personality of the corporation (access to tort and contract law in a manner similar to a person);
- Limited liability of the shareholders (a shareholder's personal liability is limited to the value of their shares in the corporation);
- Shares, as traded on a stock exchange;
- Delegated management, as managed by the board of directors.
Corporate law is divided into corporate governance (concerning power relations) and corporate finance (concerning rules on how capital is used).¹ The term corporation is synonymous with large publicly owned companies in the US.
The role of a corporate lawyer is to ensure the legality of commercial transactions, and advising corporations on their legal rights and duties.² Corporate lawyers, therefore, must understand aspects of²: contract law, tax law, accounting, securities law, bankruptcy, intellectual property rights, licensing, zoning laws, and the laws specific to the business of the corporations that they work for.
Corporations today are capable of shifting capital and labor supply chains across borders, as well as trading with overseas corporations, thus increasing the number of disputes of an inter-state nature outside a unified legal framework.² This raises issues of the enforceability of standard practices, which leads us to corporate social responsibility (CSR).²
CSR refers to the voluntary activities undertaken by a company to operate in an economic, social and environmentally sustainable manner.>³ CSR refers to corporate initiative to assess and take responsibility for the effects the company has on the environment and its impact on social welfare.³
References:
1. Clark, Robert. (1986). Corporate Law. Anatomy of Corporate Law.
2. Nader, Ralph and Wesley Smith. (1998). No Contest: Corporate Lawyers and the Perversion of Justice in America.
3. Investopedia. Corporate Social Responsibility. Retrieved May 6, 2014, from http://www.investopedia.com/terms/c/corp-social-responsibility.asp
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