Corporations in the United States

Corporation in the United States are companies or group of people authorized to act as a single entity (legally a person) and recognized as such in law. In the United States, forming a corporation usually required an act of legislation until the late 19th century. Many private firms, such as Carnegie's steel company and Rockefeller's Standard Oil, avoided the corporate model for this reason (as a trust). State governments began to adopt more permissive corporate laws from the early 19th century, although these were all restrictive in design, often with the intention of preventing corporations for gaining too much wealth and power.[1]

New Jersey was the first state to adopt an "enabling" corporate law, with the goal of attracting more business to the state,[2] in 1896. In 1899, Delaware followed New Jersey's lead with the enactment of an enabling corporate statute, but Delaware only became the leading corporate state after the enabling provisions of the 1896 New Jersey corporate law were repealed in 1913.[1]

The end of the 19th century saw the emergence of holding companies and corporate mergers creating larger corporations with dispersed shareholders. Countries began enacting anti-trust laws to prevent anti-competitive practices and corporations were granted more legal rights and protections.

Laws

In 1880 was created the Sherman Antitrust Act, a landmark federal statute in the history of United States antitrust law (or "competition law") passed by Congress in 1890. Passed under the presidency of Benjamin Harrison, it prohibits certain business activities that federal government regulators deem to be anti-competitive, and requires the federal government to investigate and pursue trusts.

In 1914 was created the Clayton Antitrust Actwith the goal of adding further substance to the U.S. antitrust law regime; the Clayton Act sought to prevent anticompetitive practices in their incipiency. That regime started with the Sherman Antitrust Act of 1890, the first Federal law outlawing practices considered harmful to consumers (monopolies, cartels, and trusts). The Clayton Act specified particular prohibited conduct, the three-level enforcement scheme, the exemptions, and the remedial measures.

In 1914 was also created the Federal Trade Commission Act of 1914 that outlaws unfair methods of competition and outlaws unfair acts or practices that affect commerce.

In 1936 was signed the Robinson–Patman Act that prohibits anticompetitive practices by producers, specifically price discrimination. It was designed to protect small retail shops against competition from chain stores by fixing a minimum price for retail products.

In 1950 passed the Celler–Kefauver Act that reformed and strengthened the Clayton Antitrust Act of 1914 to close a loophole regarding asset acquisitions[3] and acquisitions involving firms that were not direct competitors. While the Clayton Act prohibited stock purchase mergers that resulted in reduced competition, shrewd businessmen were able to find ways around the Clayton Act by simply buying up a competitor's assets.[4] The Celler–Kefauver Act prohibited this practice if competition would be reduced as a result of the asset acquisition. Sometimes referred to as the Anti-Merger Act, the Celler–Kefauver Act gave the government the ability to prevent vertical mergers and conglomerate mergers which could limit competition.

In 1974 passed the Tunney Act to have a court review Justice Department decisions regarding mergers and acquisitions. It has been referred to in the AT&T actions with regards to SBC and BellSouth

In 1976 passed the Hart–Scott–Rodino Antitrust Improvements Act, a set of amendments to the antitrust laws of the United States, principally the Clayton Antitrust Act. Provides that parties must not complete certain mergers, acquisitions or transfers of securities or assets, including grants of executive compensation, until they have made a detailed filing with the U.S. Federal Trade Commission and Department of Justice and waited for those agencies to determine that the transaction will not adversely affect U.S. commerce under the antitrust laws. While parties can carry out due diligence and plan for post-merger integration, they may not take any steps to integrate operations, such as an acquiring party obtaining operational control of the acquired party.[5]

In 2002 was passed the Sarbanes–Oxley Act (Pub.L. 107–204, 116 Stat. 745, enacted July 30, 2002), that set new or expanded requirements for all U.S. public company boards, management and public accounting firms. There are also a number of provisions of the Act that also apply to privately held companies, for example the willful destruction of evidence to impede a Federal investigation.

In 2010 was created the Dodd–Frank Wall Street Reform and Consumer Protection Act was passed as a response to the Great Recession, it brought the most significant changes to financial regulation in the United States since the regulatory reform that followed the Great Depression.[6][7][8][9] It made changes in the American financial regulatory environment that affect all federal financial regulatory agencies and almost every part of the nation's financial services industry.[10][11]

Limited liability companies

In the 19th century, a new form of company having the limited liability protections of a corporation, and the more favorable tax treatment of either a sole proprietorship or partnership was developed. While not a corporation, this new type of entity became very attractive as an alternative for corporations not needing to issue stock. In the last quarter of the 20th Century this new form of non-corporate organization became available in the United States and other countries, and was known as the limited liability company or LLC. LLC is a form of organization that technically is not corporations (even though they have many of the features of one).

Taxes paid by corporations

Corporations are one of the major groups of employers and tax payers in the United States, US$357,500 millions, representing more than 11% of the United States federal budget.[12][13] These taxes are used to improve education, recreation and defense of American population.

See also

Organizations

Laws

Lists

Other

References

  1. 1 2 Smiddy, Linda O.; Cunningham, Lawrence A. (2010), Corporations and Other Business Organizations: Cases, Materials, Problems (Seventh ed.), LexisNexis, pp. 228–231, 241, ISBN 978-1-4224-7659-8
  2. ↑ The Law of Business Organizations, Cengage Learning
  3. ↑ http://ftc.gov/ftc/turns100/index.shtm
  4. ↑ "Antitrust Law".
  5. ↑ Fenton, Kathryn; McDonald, Bruce. "DOJ Brings "Gun Jumping" Enforcement Action and Requires Disgorgement". Transaction Advisors. ISSN 2329-9134.
  6. ↑ "Historic financial overhaul signed to law by Obama". Yahoo! News. July 21, 2010. Archived from the original on July 22, 2010. Retrieved July 22, 2010.
  7. ↑ Paletta, Damian; Lucchetti, Aaron (July 16, 2010). "Law Remakes U.S. Financial Landscape". Wall Street Journal. Retrieved July 22, 2010.
  8. ↑ "Obama to Sign Dodd–Frank Financial Regulatory Reform Bill Into Law Today". The Washington Independent. July 21, 2010. Retrieved July 22, 2010.
  9. ↑ "Half A Loaf, Financial Reform Edition".
  10. ↑ "Dodd–Frank Act Becomes Law". The Harvard Law School Forum on Corporate Governance and Financial Regulation. July 21, 2010. Retrieved July 25, 2010.
  11. ↑ "The Dodd–Frank Act: Significant Impact on Public Companies" (PDF). Skadden, Arps, Slate, Meagher & Flom. Retrieved July 25, 2010.
  12. ↑ Subtitle A of Title 26 of the United States Code, in particular 26 U.S.C. § 11, § 881, and § 882. For a thorough overview of federal income taxation of corporations, see Internal Revenue Service Publication 542, Corporations. See also Willis|Hoffman chapters 17-20, Pratt & Kulsrud chapters 19–21, Fox chapter 30 (each fully cited under Further reading). For purely corporate tax matters, the Bittker & Eustice treatise cited fully under Treatises is authoritative and has been cited by the Supreme Court.
  13. ↑ For a more complete history, see Seidman's Legislative History of Income Tax Laws, 1938, reprinted 2003 as ISBN 1-58477-336-7.
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