Corporate law (also “company” or “corporations” 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, creditors, and other stakeholders such as consumers, the community and the environment interact with one another under the internal rules of the firm.
Corporate law is a part of a broader companies law (or law of business associations). Other types of business associations can include partnerships (like most law firms), or trusts (like a pension fund) or companies limited by guarantee (like some universities or charities). Corporate law is about big business, which has separate legal personality, with limited liability or unlimited liability for its members or shareholders, who buy and sell their stocks depending on the performance of the board of directors. It deals with the firms that are incorporated or registered under the corporate or company law of a sovereign state or their subnational states. The four defining characteristics of the modern corporation are:
- Separate Legal Personality of the corporation (the right to sue and be sued in its own name i.e. the law treats the company as a human being)
- Limited Liability of the shareholders (so that when the company is insolvent, they only owe the money that they subscribed for in shares)
- Transferable 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