What is corporate law?

7 important questions on What is corporate law?

What is the nexus of contracts theory?

Nexus of contracts is that corporations are nothing more than a collection of contracts between parties

What three features does a general partnership lack compared to a corporation?

A general partnership lacks
1. Legal personality
2. Transferability of shares
3. Limited liabilty

What is the difference between "the place of incorporation rule" and "the real seat doctrine"?

The place of incorporation rule: allows a firm to incorporate in a jurisdiction regardless of the firms principal place of business

The real seat doctrine: requires a firm to incorporate in the jurisdiction where it has its principal place of business
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What is a positve and a negative effect of regulatory competition?

Regulatory competition: a jurisdiction induces firms to incorporate under its law, so that revenues go directly to the state

Positive effect: best equipped state will maximize shareholder value

Negative effect: stripping the law of protections for those who not control the decision

What are two main benefits of the fact that the board of a corporation is formally distinct from the corporations shareholders?

1. It economises the costs of decision making
2. Permits the board to protect the interest of minority shareholders and other stakeholders

What are default provisions?

Governs unless the parties state an alternative rule
- Don't need the consent of the other contracting party

What is investor ownership? (point 5)

Proportional to the amount of capital contributed by the shareholder (right to control firm and receive earnings)

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