A corporation is a legal entity separate from the persons that form it. In British tradition it is the term designating a body corporate, where it can be either a corporation sole (an office held by an individual natural person, which is a legal entity separate from that person) or a corporation aggregate (involving more persons). In American and, increasingly, international usage, the term denotes a body corporate formed to conduct business, and this meaning of corporation is discussed in the remaining part of this entry (the limited company in British usage).
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").
Despite not being natural persons, corporations are recognized by the law to have rights and responsibilities like actual people. Corporations can exercise human rights against real individuals and the state, and they may be responsible for human rights violations. Just as they are "born" into existence through its members obtaining a certificate of incorporation, they can "die" when they lose money into insolvency. Corporations can even be convicted of criminal offences, such as fraud and manslaughter. Five common characteristics of the modern corporation, according to Harvard University Professors Hansmann and Kraakman are...
- delegated management, in other words, control of the company placed in the hands of a board of directors
- limited liability of the shareholders (so that when the company is insolvent, they only owe the money that they subscribed for in shares)
- investor ownership, which Hansmann and Kraakman take to mean, ownership by shareholders.
- separate legal personality of the corporation (the right to sue and be sued in its own name)
- transferrable shares (usually on a listed exchange, such as the London Stock Exchange, New York Stock Exchange or Euronext in Paris)
Ownership of a corporation is complicated by increasing social and economic interdependence, as different stakeholders compete to have a say in corporate affairs. In most developed countries excluding the English speaking world, company boards have representatives of both shareholders and employees to "codetermine" company strategy. Calls for increasing corporate social responsibility are made by consumer, environmental and human rights activists, and this has led to larger corporations drawing up codes of conduct. In Australia, Canada, the United Kingdom and the United States, corporate law has not yet stepped into that field, and its building blocks remain the study of corporate governance and corporate finance.
The Corporation Movie Part 1
The Corporation Movie Part 2
Corporation's history
The word "corporation" derives from corpus, the Latin word for body, or a "body of people". Entities which carried on business and were the subjects of legal rights were found in ancient Rome, and the Maurya Empire in ancient India. In medieval Europe, churches became incorporated, as did local governments, such as the Pope and the City of London Corporation. The point was that the incorporation would survive longer than the lives of any particular member, existing in perpetuity. The alleged oldest commercial corporation in the world, the Stora Kopparberg mining community in Falun, Sweden, obtained a charter from King Magnus Eriksson in 1347. Many European nations chartered corporations to lead colonial ventures, such as the Dutch East India Company or the Hudson's Bay Company, and these corporations came to play a large part in the history of corporate colonialism.
During the period of colonial expansion in the seventeenth century, the true progenitors of the modern Corporation emerged as the "chartered company". Acting under a charter sanctioned by the Dutch monarch, the Vereenigde Oost-Indische Compagnie (VOC), or the Dutch East India Company, defeated Portuguese forces and established itself in the Moluccan Islands in order to profit from the European demand for spices. Investors in the VOC were issued paper certificates as proof of share ownership, and were able to trade their shares on the original Amsterdam stock exchange. Shareholders are also explicitly granted limited liability in the company's royal charter. In the late seventeenth century, Stewart Kyd, the author of the first treatise on corporate law in English, defined a corporation as, "a collection of many individuals united into one body, under a special denomination, having perpetual succession under an artificial form, and vested, by policy of the law, with the capacity of acting, in several respects, as an individual, particularly of taking and granting property, of contracting obligations, and of suing and being sued, of enjoying privileges and immunities in common, and of exercising a variety of political rights, more or less extensive, according to the design of its institution, or the powers conferred upon it, either at the time of its creation, or at any subsequent period of its existence."
Chief executive officer
A chief executive officer (CEO) or chief executive is typically the highest-ranking corporate officer (executive) or administrator in charge of total management of a corporation, company, organization, or agency, reporting to the board of directors. In internal communication and press releases, many companies capitalize the term and those of other high positions, even when they are not proper nouns.
In some European Union countries, there are two separate boards, one executive board for the day-to-day business and one supervisory board for control purposes (elected by the shareholders). In these countries, the CEO presides over the executive board and the chairman presides over the supervisory board, and these two roles will always be held by different people. This ensures a distinction between management by the executive board and governance by the supervisory board. This allows for clear lines of authority. The aim is to prevent a conflict of interest and too much power being concentrated in the hands of one person. There is a strong parallel here with the structure of government, which tends to separate the political cabinet from the management civil service.
In other parts of the world, such as Asia, it is possible to have two or three CEOs in charge of one corporation. In the UK, many charities and government agencies are headed by a chief executive who is answerable to a board of trustees or board of directors. In the UK, the chair (of the board) in public companies is more senior than the chief executive (who is usually known as the managing director). Most public companies now split the roles of chair and chief executive.
In France, a CEO/MD is known as the "PDG" (French: président directeur général); in Sweden, the CEO/MD is known as "VD" (Swedish: verkställande direktör); in Australia, the CEO can be known as the "MD" (managing director); in Spain, the usual name is "director general"; while in Italy, the position is called "AD" (Italian: amministratore delegato). In Denmark and Norway the CEO is known as the "administrerende direktør", abbr. adm.dir.
In the US, and in business, the executive officers are the top officers of a corporation, the chief executive officer (CEO) being the best-known type. The definition varies; for instance, the California Corporate Disclosure Act defines "executive officers" as the five most highly-compensated officers not also sitting on the board of directors. In the case of a sole proprietorship, an executive officer is the sole proprietor. In the case of a partnership, an executive officer is a managing partner, senior partner, or administrative partner. In the case of a limited liability company, an executive officer is any member, manager, or officer.
At Queen's university in Kingston, Ontario the CEO of the QSB and commerce faculty are ten extremely important individuals. The current CEO is comprised of Denny Downie, Jamie Shea, Rose Thuringer, Yianni Fountas, Mark Shopiro, Taylre Duarte, Mark Vesely, Adam Mitchell, Katarina Wittkamp, Kevin Dussesldorp, and Warren Ehgoetz. They are all extremely attractive and quite awesome.
In the airline industry, the Executive Officer, more commonly known as the First Officer, is the second in command of the aircraft. In a fixed wing aircraft the First Officer sits in the right-hand seat but in a rotary wing aircraft they sit on the left.
Motivational techniques
One of the motivational techniques used in corporations are so called motivational posters. Those posters are placed on walls in corporation buildings to show people the traits wich are desired in a work place.
CEOs use also motivational movies and show them in presentations.
See for yourself if you are suited to work in a corporation!
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