Corporate Law

Corporate law regulates the creation, operation, and dissolution of corporations and other business associations. Corporations have historically been categorized by the following attributes: limited liability, free transferability of ownership interests, continuity of existence, centralized management, and taxation as an entity. Modern categorization of corporations is more complex, as a number of different types of business entities and features now exist. S Corporations, for example, are taxed like partnerships, and limited liability companies are classified as neither partnerships nor corporations.

State corporate law generally regulates business entities. A business can choose to incorporate in any state, so long as the specific requirements of that state are met. More than half of all publically traded American companies are incorporated in Delaware. Consequently, Delaware corporate law sets the standard for other states, and decisions from the Delaware courts are highly influential in all jurisdictions. In addition to regulating incorporation, state corporate law dictates most issues affecting business associations, including corporate governance, dissolution, liability of incorporators, directors, and officers, duties of officers and directors, mergers and acquisitions, restructuring, corporate finance, and shareholder rights. Federal corporate law-specifically the Securities Exchange Act of 1934 (15 U.S.C.S. § 78d) and the Securities Act of 1933 (15 U.S.C.S. § 77a)-governs the issuance and trading of corporate securities. The issuance and trading of securities is also governed under state "blue sky" law. The Sarbanes-Oxley Act of 2002 (Pub.L. 107-204, 116 Stat. 745), also administered by the Securities and Exchange Commission, set new standards for financial disclosures, corporate governance, and annual reports. Stiff penalties accompany violations.