Corporate law
In the town of Wilmington (pop. 72,664),
resides the Delaware Supreme Court, which
through the Delaware General Corporation
Law regulates 60% of American corporations:
the world’s largest, wealthiest and most
powerful.
Corporate law (also "company" or "corpora-
tions" law) is the law of the most dominant
kind of business enterprise in the modern
world. Corporate law is the study of how
shareholders, directors, employees, credit-
ors, and other stakeholders such as con-
sumers, the community and the environment
interact with one another under the internal
rules of the firm.
Corporate law is a part of a broader com-
panies law (or law of business associations).
Other types of business associations can in-
clude partnerships (like most law firms), or
trusts (like a pension fund) or companies lim-
ited by guarantee (like some universities or
charities). Corporate law is about big busi-
ness, which has separate legal personality,
with limited liability for its shareholders, who
buy and sell their stocks depending on the
performance of the board of directors. It
deals with the firms that finish their titles
with "plc" (UK), "Inc" (US) or "AG and Gm-
bH" (Germany). According to the American
Professors Hansmann (of Yale University)
and Kraakman (of Harvard University), the
five defining characteristics of the modern
corporation are:[1]
• separate legal personality of the
corporation (the right to sue and be sued
in its own name)
• limited liability of the shareholders (so
that when the company is insolvent, they
only owe the money that they subscribed
for in shares)
• transferrable shares (usually on a listed
exchange, such as the London Stock
Exchange, New York Stock Exchange or
Euronext in Paris)
• delegated management, in other words,
control of the company placed in the
hands of a board of directors
• investor ownership, which Hansmann and
Kraakman take to mean, ownership by
shareholders.
The last of these defining features is con-
tested. For a start, it is pointed out that
shareholders do not own corp