Corporations

Dr. Manoranjan Kumar

Assistant Professor
Department of Law
Chanakya National Law University, Patna
Nyaya Nagar, Mithapur, Patna
Mob.: +91 9709475958
Email: manoranjan.cnlu@gmail.com
 Corporation: Definition & Kinds
• A corporation is a group or series of
individuals which by a legal fiction is
regarded and treated as a itself a person
• Corporations are of two kinds
1) Corporation Sole
2) Corporation Aggregate
 Corporation Sole
• A corporation sole is an incorporated series of
successive persons
• Corporation sole is composed of one individual
only which is incorporated by law
• At any given point of time, there is only one
member of corporation sole
• The same person has a dual personality, one as
a natural persons and the other as the legal
person known as corporation sole
 Corporation Sole
• Generally, corporations sole are formed when
the successive holders of some public office
are incorporated so as to constitute a single,
permanent and legal person
• In England, the Sovereign is said to be a
corporation sole
• The maxim king is dead, long live the kind
aptly describes the dual personality of the
sovereign in England
 Corporation Sole
• In England, the official heads of departments
which have rights to property e.g., the
postmaster general etc. are the examples of
corporation sole
• In all the instances of the corporation sole,
we find that it bears the same name as the
natural person who is the sole member of
this corporation at a given point of time
 Corporation Sole
• Indian law recognizes the difference between
corporation sole and corporation aggregate
• Various offices like that of the Governor of the
Reserve Bank, the Post Master General of the
post offices, the General Managers of the
Railways, the Registrar of the Supreme Court
and the High Courts etc. are some examples of
the corporation sole
 Corporation Aggregate
• A corporation aggregate is the incorporated
group of co-existing persons

• A corporation aggregate is composed of

several members at a time who are
incorporated as one legal person
 Corporation Aggregate
• Registered company, municipal corporations
are the examples of a corporation aggregate

• Corporations aggregate are more numerous

and important
• Thus, a company is in the eyes of law different
from the individual shareholders who are its
members
 Agents, Beneficiaries and Members of a
Corporation
• In reality, a corporation
1) has neither soul nor body
2) Cannot act on its own
3) Cannot have any interest of its own
• A corporation
1) Cannot act save through the agency of some
representative
2) Cannot have any interests save those which are on
behalf of actual human beings
Agents, Beneficiaries and Members
• Acts of the corporation in law, are done in fact
by the representatives or the shareholders as
its agents or representatives

• Interests, rights or property of a corporation

are in fact those of its shareholders and are
held by it for their benefit
Agents, Beneficiaries and Members
• Every legal person has therefore certain
agents or representatives (through whom it
acts), certain beneficiaries (on whose behalf
it exists and performs functions) and certain
members (who constitute the corpus i.e., the
body, the group or series as the case may be
that is so incorporated as to constitute a legal
person)
Agents, Beneficiaries and Members
• A man’s privileges and responsibilities in respect
of a corporation depend on whether he is one of
its representatives or beneficiaries and not on
whether he is formally accounted as one of its
members

• It is interesting to note that some or all the

members of a corporation may be corporations
themselves
Acts and Liabilities of a Corporation
• Corporation acts through agent or the
representative because it cannot acts on its
own as it has neither soul nor body

• By the same logic, however, a corporation

cannot confer any authority on any agent
Acts and Liabilities of a Corporation
• The authority of the agents and representatives
of a corporation is conferred, limited and
determined by

1. the will of some human beings who are in the

eyes of law identified for this specific purpose
as the corporation itself or by

2. the law itself

Acts and Liabilities of a Corporation
• The first directors of a company for example,
may be appointed by or in accordance with
the articles of association or they may be
appointed at a meeting of the shareholders.
• The directors so appointed are themselves
regarded as the alter ego of the company for
diverse many purposes.
Acts and Liabilities of a Corporation
• An important rule about the companies is that
their powers are restricted by law
• An Act beyond these limitations will not be
imputed to the corporation
• Act even though in the name of a corporation,
will be ultra vires if it is beyond the legally
appointed limits
Acts and Liabilities of a Corporation
• In case of a statutory corporation, the power
and purposes are prescribed by the statutes
• In case of a company registered under the
Companies Act, the memorandum of
association of the company sets forth the said
purposes
Acts and Liabilities of a Corporation
• As a corporation can act, so it can be held
liable also
• A corporation can be held liable even for
wrongful acts, including wrongful acts
involving malice, fraud and even intent or
motive
• Corporations like natural persons are within
the criminal law jurisdiction
Acts and Liabilities of a Corporation
• It is obvious that the liability imposed upon a
corporation is in reality a liability imposed
upon the beneficiaries on whose behalf the
property is held and functions are performed
by the corporation

• Corporate’s liability therefore is an instance of

vicarious liability
 Uses and Purposes of Corporation
• There is probably nothing we cannot do
without the conception of incorporation

• If that is so why do we have corporations?

• Simple, there are many things which we can

do in better and efficient way with the aid of
the concept of incorporation
 Uses and Purposes of Corporation
• There is difficulty in dealing with the common
interests vested in large number of individuals.
Law can easily deal with the complications
arising out of the transactions carried out by
single or few individuals. But, if there be
multitude of persons having common interests
then, it would be difficult to deal with the
disputes or complications arising out there.
 Uses and Purposes of Corporation
• The law therefore intends to reduce the
complexities of this collective ownership by
transforming it to the individual ownership
• Trusteeship and incorporation are the two
possible means of doing this
• Trusteeship we have seen is also used in cases of
incapacity, uncertainty etc.
• Out of the two, incorporation has several
advantages over the trusteeship
Uses and Purposes of Corporation
• Secondly, the concept of incorporation
enables the traders to deal with limited
liability
• Depending upon the public policy of the state,
sometimes tax avoidance is also one of the
motives of incorporation
 Creation and Extinction of a Corporation

• Unlike a human being, the birth and death of

legal persons are not determined by the
nature
• Legal persons being purely an arbitrary
creation of law, they come into existence at
the will of the law, continue to exist till the
pleasure of law and may be extinguished inn
accordance with or by the law
 State as a Corporation
• Of all forms of society the State is by far the
largest
• Of all the associations of individuals, state is by
far the most important by virtue of the functions
it performs and the immense wealth it owns
• Is the state recognised as a person by the law?
• As per the law of England, state is not a person
or body corporate.
 State as a Corporation
• The real personality of the monarch who is the
head of the State has rendered it superfluous
to attribute any legal personality to the State
separately in Great Britain
 State as a Legal Person
• In many modern systems on the other hand,
the State can be seen as a legal person
endowed with such powers as the legal
system which supports it provides.

• In international law the State is a legal person

THANK YOU