It has been said that a corporation is legally just another person.But what does this mean?And how can a corporation have personhood, sharing many of the same rights as you and I have?
We will examine this very question about
personhood and what this means to you if you own and/or operate a corporation.
What is a corporation?
A corporation is a structure created by one or more people, enabling them to own & operate assets, as well as pooling money & other resources for a specific purpose.A for profit corporation has the express purpose of making a profit, whereas a non-profit (aka non-stock) corporation usually has a more benevolent purpose (i.e. feeding the poor, or promoting a cause).
How did they get personhood?
The legal recognition of a corporation (or LLC) as a person, came from the US Constitution on US Common Law which recognizes natural persons or organizations of persons may hold and exercise certain rights, including owning and operating assets, as well as the right to sue or be sued.
As recent as 2010, the US Supreme Court (Citizens United v. Federal Election Commission) ruled that corporation & union spending may not be restricted by the government under the First Amendment, because a corporation, which is composed of individuals, deserves protection under the First Amendment, guaranteeing free speech.
What this all means to you?
Although a corporation does not have all the rights of a natural person, they do have many of them.Because of this, a corporation can buy, operated and sell businesses; hire & fire people; buy and sell other entities; open up bank accounts; take out loans; it can even commit a sort of corporate suicide known as voluntary dissolution.
However, to continue to retain these rights, a corporation must follow its state’s rules to remain an active corporation.If a corporation is not considered active, then the corporation is essentially considered ‘dead’ and loses its rights.It is then, that a corporation’s veil can be pierced, subjecting its owners (shareholders) to potentially personal liability.