slug.com slug.com

1 0

I've been thinking about the concept of the corporation, both in business and in government (one could also argue that I should include charities as a separate category but in reality, charity has become a business). Before the idea of the corporation was born, business was done by sole propriatership or partnerships. True, there were guilds and crafts organization for labor, maybe throw in a cabal or two, depending on the country, but corporations were invented as a method to reduce the risk of doing business. By their very nature corporations act as magnifiers of capital.

With a partnership, unless otherwise stated, all partners are equal and a large number of partners can become unwieldy and even destructive to the business. The other problem is that the sins of one partner becomes the sins of the other partners to be shared equally. But the corporation allows for the formation of the capital needed to conduct a business but limits those capitalists from personal risk. Should the corporation fail, all that is lost is the capital. We also know these corporations by another name, Limiter Liability Companies or LLC.

So one buys in and receives the right to participate in the profits, if any. Managers may be owners of shares of the corporate stock or not. All pretty simple concepts. In the case of criminal or civil wrong doing by the corporation its officers may be heal legally and financially liable but the stockholders get a pass of almost all liability.

One of the favorite methods that is no longer in use was the creation of a trust, a legal document that owned the monies and the trustee who ran the business. But by the start of the 1900, trusts had been busted from the business world. Seems that the trust was too often used as a device to limit disclosure on who owned what, where, and when, thus evading legal complaints against the business. Combines were another legal construct that has since fallen from use in business.

What are the hazards corporations pose to the many societies around the world today? And have corporate structures outgrown their usefulness? I shall give my few thoughts on those topics tomorrow.

Marta-Amance 7 Mar 30
Share

Be part of the movement!

Welcome to the community for those who value free speech, evidence and civil discourse.

Create your free account

1 comment

Feel free to reply to any comment by clicking the "Reply" button.

0

One of the strengths of a corporation is the corporate veil which insulates the stakeholders from liability in many cases. This is one of my biggest concerns as well because when your name is associated with the company, you are more likely to be honest and forthright.

You can include a link to this post in your posts and comments by including the text q:26030
Slug does not evaluate or guarantee the accuracy of any content. Read full disclaimer.