Corporations exist as a product of corporate law, and their rules balance the interests of the shareholders that invest their capital and the employees who contribute their labor. People work together in corporations to produce value and generate income. In modern times, corporations have become an increasingly dominant part of economic life. People rely on corporations for employment, for their goods and services, for the value of the pensions, for economic growth and social development.
The defining feature of a corporation is its legal independence from the people who create it. If a corporation fails, shareholders normally only stand to lose their investment (and possibly, in the unusual case where the shares are not fully paid up, any amount outstanding on them - and not even that in the case of a No liability company), and employees will lose their jobs, but neither will be further liable for debts that remain owing to the corporation's creditors unless they have separately varied this, e.g. with personal guarantees. This rule is called limited liability, and it is why the names of corporations in the UK end with "Ltd." (or some variant like "Inc." and "plc").
The defining feature of a corporation is its legal independence from the people who create it. If a corporation fails, shareholders normally only stand to lose their investment (and possibly, in the unusual case where the shares are not fully paid up, any amount outstanding on them - and not even that in the case of a No liability company), and employees will lose their jobs, but neither will be further liable for debts that remain owing to the corporation's creditors unless they have separately varied this, e.g. with personal guarantees. This rule is called limited liability, and it is why the names of corporations in the UK end with "Ltd." (or some variant like "Inc." and "plc").
No comments:
Post a Comment