What Is Corporate Law?

Corporate law refers to the body of laws and regulations which govern how corporations are formed, as well as their interactions with other companies, individuals, and the public. These laws address the rights and responsibilities of all people who are involved with the operating, owning, and management of the corporation.

Before continuing to discuss corporate law, it is helpful to first discuss what exactly is a corporation. A corporation is a specific type of business structure that is created and regulated by state law. More specifically, a corporation is defined as a legal entity that is separate from its owners, or, its shareholders. What this means is that only the corporation itself can be held liable for corporate obligations, such as maintaining certain business records.

Generally speaking, a corporation is classified according to specific factors such as:

Their tax structure;The purpose of the corporation; andThe number of shareholders and amount of stock to be issued.Some common forms of corporations are:

C Corporation; S Corporation; Non-Profit Corporation; Business Corporation; Professional Corporation; Foreign Corporation; and Public or Private Corporation.

However, the term corporation generally refers to the two main categories that corporations are divided into according to tax laws: C Corporations, and S Corporations. The defining difference between these two types is that C Corporations are taxed separately from their owners, while S Corporations are not.

Some other characteristics of corporations include:

Decreased or limited liability of members of the company, as previously mentioned;Separate legal personality of the company, which means that a corporation may be treated as an “individual” for some purposes;

Different rules regarding stocks and ownership of the company; Increased rights and responsibilities of directors and other leaders; and/orPreferential tax treatment, in some states.

As such, corporation law clarifies how a company can become a corporation, and how corporations are allowed to participate in the economic marketplace. Corporation law may also be referred to as “company law” or “corporations law.”