Learn something new every day
More Info... by email
De jure corporations are simply businesses that have been fully and legally chartered in accordance with the provisions and requirements of a given government. For the most part, the assumption is that a company currently engaged in a business enterprise is in fact a de jure corporation. However, that is not always the case.
In contrast to a de jure corporation, there is also a designation of a de facto corporation. Corporations of this type are not currently fulfilling the legal requirements of the government involved. Doing business with a de facto corporation carries a higher degree of risk, in that it is more difficult to go through the legal system to seek redress in the event that a business transaction goes awry. For this reason, most companies that enter into contractual agreements with other companies tend to verify at some point that the corporation in question is in fact a de jure corporation.
While the process of properly registering and complying with various standards is slightly different from one nation to another, most have a concise process for allowing companies to obtain the proper charter. In the United States, a company will identify the necessary elements to obtain a charter from one of the fifty states that are part of the Union. Once the corporation has provided documentation that the entity has complied with all the requirements set forth by that state, a formal application is submitted for evaluation. If everything is in order, the state grants the charter and the corporation can legally do business anywhere within the United States.
The term de jure is translated as “a matter of law.” Thus, when a company obtains the status of being a de jure corporation, the government recognizes the business as being properly ordered to meet the minimum requirements set for in law at the time that the charter was granted. The granting of the charter also implies that the government anticipates that the de jure corporation will continue to remain in compliance even after obtaining the charter. While it is relatively uncommon, it is possible for an issuing entity to revoke the charter, if there is solid evidence that a company is failing to comply with current laws and regulations.