Three Features Of Corporate Governance

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Introduction This paper defines corporations in general terms, and describes the main characteristics of modern corporations as identified in most legal systems. The purpose of this paper is to offer a brief overview of the Corporation Law in both the United States and the European Union, in general, and more specifically regarding their corporate governance models. Then, to draw some conclusions based on the provided information on the subject. Definition Corporations are generally recognised by all modern systems of law as 'legal persons', which means that they may acquire rights and duties just like actual humans. In other words, when a group of people go through the procedures to incorporate, they will acquire rights to make contracts,…show more content…
- Non-profit corporations. - Government owned corporations. Main characteristics of modern corporations Most modern legal systems and jurisdictions identify corporations with five main characteristics, and these characteristics are :(5) - Separate legal personality, which means that the corporation has a legal independence from the people who create it.(6) - Limited liability, which means that the personal liability of shareholder is limited to the value of their shares in the corporation. - Shares' transferability. As a public company, the corporation's shares could be freely traded on a stock exchange, or with certain restrictions. - Centralized management; the company's day-to-day management responsibility is given to delegated executives by the board of directors. - Shared ownership by contributors or investors. Corporate Law In some legislations it could also be known as company or corporations law. Corporate law is mainly the set of rules and regulations under which the shareholders, directors, employees, creditors, and other stakeholders such as consumers, the community and the environment interact with each…show more content…
Those mechanisms include supervising the corporations, their agents and stakeholders regarding all their practices, policies, actions and decisions. The structures and principles of the corporate governance define the distribution of rights and responsibilities among all persons within the corporation, including the board of directors, managers, shareholders, creditors, auditors, regulators, and other stakeholders.(10) Additionally the corporate governance sets the objectives of the corporation and the required processes for them to be pursued, in compliance with the social, economic and regulatory atmosphere in which the corporate functions. The Continental European model In order to improving the corporate governance, some European countries demand a two-tiered directors' board. The Executive Board in the two-tiered board is comprised of the executives of the company, who manage day-to-day operations. While the Non-Executive directors, who are made up of the supervisory board representing shareholders and employees, have the authority and power to hire and fire the executive board members, decide their compensation, also to review and reconsider major business

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