In the 1839 Bouvier's Law Dictionary, these words are used:
"An artificial being created by law and composed of individuals who subsist as a body politic under a special denomination with the capacity of perpetual succession and of acting within the scope of its charter as a natural person."
Odgers wrote, in 1911:
"... the law ... recognises certain artificial entities and treats them as persons, though they only exist in theory. Chief amongst these artificial persons stand corporations."
When a government creates a corporation, it does so by statute or by issuing a charter or a certificate, after which the corporation is an independent legal person in the eyes of the law.
The wide concept of the term, to include profit-seeking and not-for-profits, is exhibited in the US Code which defines a corporation as:
"The term corporation includes (an) association having a power or privilege that a private corporation, but not an individual or a partnership, possesses; partnership association organized under a law that makes only the capital subscribed responsible for the debts of such association; joint-stock company; unincorporated company or association; or business trust; but does not include limited partnership. "
Canada's Interpretation Act, at §21, is similar to the content of some provincial statutes, such as Ontario's Interpretation Act. The federal law describes a corporation indirectly but as follows:
" "Words establishing a corporation shall be construed:
- As vesting in the corporation power to sue and be sued, to contract and be contracted with by its corporate name, to have a common seal and to alter or change it at pleasure, to have perpetual succession, to acquire and hold personal property for the purposes for which the corporation is established and to alienate that property at pleasure;
- As vesting in a majority of the members of the corporation the power to bind the others by their acts; and
- As exempting from personal liability for its debts, obligations or acts individual members of the corporation who do not contravene the provisions of the enactment establishing the corporation."
The primary advantage of a for-profit corporation is that it provides the shareholders with a right to participate in the profits (by dividends) without any personal liability (the company absorbs the entire liability of the business).
A corporation is either profit-seeking or not-for-profit, the latter also known as society, not for profit corporation or association.
References
- Interpretation Act, Revised Statutes of British Columbia 1996, Chapter 238, §17.
- Interpretation Act, Revised Statutes of Canada 1985, Chapter I-21
- Interpretation Act, Revised Stautes of Ontario 1990, Chapter I-11
- Odgers, W. M., The Common Law of England (London: Sweet & Maxwell, 1911), page 1398.
- US Code, Title 11 (re bankruptcy), Chapter 1, ¶101(9)