Corporation: An ingenious device for obtaining profit without individual responsibility.
— Ambrose Bierce
What is corporate law?
Corporate law is the group of laws, rules, and regulations governing the formation and operation of business organizations. This area of law regulates business entities, like corporations and LLCs, in how they conduct their business. It encompasses the rights and obligations of the business entity’s owners, operators, and management.
What are the characteristics of corporate business entities?
Legal Personality: Corporate owners combine their resources into an independent business entity, which can then use and sell the assets for its business operations. These assets become the property of the organization and are not easily reached by creditors.
Limited Liability: In the event, a corporation gets sued, with limited exception, only the corporate assets are at risk in the litigation. In other words, a plaintiff in a lawsuit will be unable to go after the personal assets of the corporation’s owners to satisfy the obligation. This limited liability allows the corporate owners to take greater risks and diversify their investments.
Transfer of shares: When an owner of a corporation, also known as a shareholder, or a member of an LLC, decides she no longer wants to own an interest in the organization, the business does not need to dissolve or stop doing business. Owners are allowed to transfer their interests in a business entity with limited difficulty and hassle as one might encounter in a partnership. While there can be limitations on how a shareholder can transfer ownership, allowing such transfers to take place produces and allows for the succession of the business.
Structured management: Corporations have a structured management system in place for how they conduct their business affairs. This system consists primarily of a board of directors and officers who split the decision-making authority of the business. The board of directors is typically put into place by the owners and then is responsible for appointing and monitoring the officers, which manage the day-to-day operations of the organization. Structured management in a corporation creates trust and confidence that the actions of the board are legally binding on the organization.
Stakeholder ownership: While owners have a say in some of the decisions of the corporation, they don’t directly run the company, that is left to the board of directors and the corporate officers. Stakeholders have a right to profits, or dividends, in proportion to their ownership interest, and get to vote on the membership of the board of directors.
The legal needs of a corporation and other business organizations are significant, requiring advice and help on a variety of issues ranging from organization and formation to governance and management, shareholder activity, contracts, corporate compliance, and dissolution and merger. Corporations require the guidance of a skilled attorney.
It’s not uncommon for corporate leadership to have a single place to manage its legal needs. Typically, corporations develop long-term relationships with the attorneys they work with, which allows a legal team to learn the needs and subtleties of each business.
What is the best way for a corporation to utilize an attorney?
There are two ways a corporation can utilize the services of an attorney.
First, as in-house counsel. Because of the significant needs of some corporations, they choose to meet these needs by hiring lawyers directly with the company, hiring them as employees who work exclusively for the business. In this capacity, a lawyer as in-house counsel may advise the corporation on a wide variety of matters that relate to corporate law and business activity.
Second, as outside general counsel. Corporate lawyers in this capacity work on their own or in small firms, such as ours, and provide the same guidance to the organization as in-house counsel does, but usually at a better price point. A business using an outside general counsel will receive a variety of legal services depending on the nature of your company. The primary roles of the outside general counsel in your company will include that of legal advisor, representative, and service provider. If you’d like to read more about the Contiguglia Law Firm’s Outside General Counsel service, please visit our page HERE.
As a successful business owner, you need good partners and resources to run your company. You also need good information. A confidential consultation call is the first step to better understanding your risk profile and the benefits of a full risk assessment. As an expert in risk management, I will help you succeed in business by helping you to understand, mitigate, and prevent issues related to risk management.