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What is Corporation Law?

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  • Written By: Jessica Ellis
  • Edited By: Bronwyn Harris
  • Last Modified Date: 11 November 2016
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Corporation law is an area of legal rules and statutes that guide the creation, management, and actions of a corporation. This intensely complicated legal subject is often the focus of whole legal careers; corporations often have entire legal departments meant to ensure cooperation with corporation law. Almost any step in corporate business, from forming a company to interacting with the public, is managed through corporation law.

One of the issues that makes corporation law so complex is that companies may need to comply with many different sets of laws based on the market of operations. Regions and states may have laws, but so do most national governments. Additionally, those with international operations may find themselves subject to several different sets of laws that handle the manufacturing, wages, organization, distribution, and quality standards of a business. Since international law is far from comprehensive, this can sometimes lead to direct conflicts of legality within a business that operates in multiple parts of the world.

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Corporation law dates far back into history, possibly beginning with the practice of granting royal charters to establish certain businesses. After several historical incidents where the actions of an industrial segment nearly ruined the economy of a country, such as the Tulip Mania bubble of 17th century Holland, monarchs and governments of old realized that the action of an independent business or industry can have a profound effect on the nation as a whole. The larger the business or industry, the more vital it became for law to be created for the safe management of corporations in order to protect the nation's economy to some degree.

Some of the areas that corporation law extends into include both the legal formation and liquidation procedures for a corporation, how litigation may be pursued against a corporation, the rights of shareholders, how power is distributed, and how legal liability is determined. Corporations are also subject to laws such as pollution standards, fair wage and hours laws, anti-discrimination laws, and other more general statutes. Actions between corporations, such as mergers and acquisitions, are also covered by many statutes.

One of the most controversial aspects of corporate law is the debate over corporate personhood, particularly in the United States. Originally, certain US Supreme Court decisions conferred a unique legal status on corporations in regards to certain rights such as the payment of debts and the creation of contracts, suggesting that corporations were a separate legal entity that had rights equal to individual citizens in these regards. In 2010, the US Supreme Court rendered an extremely controversial decision that also granted corporations the right to fund political campaigns, essentially in the same manner as individuals claim.

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