Corporations Law Research - Essay Example

self.”1 Corporate self interest has placed the generation of profits and protection of that profit from creditors on a plane far higher than the obligation to function in a moral, ethical manner, deserving of the status of personhood granted to it under the law. Korten D has pointed out how the corporation evolved as a means to limit the liabilities of individual investors to the extent of their investments while also imposing obligations to transfer a share of its profits to the crown.1a What has emerged however, is a system whereby every corporation strives to expand its own interests while limiting its obligations.

The corporate veil has been zealously guarded thus far, since the facility of limited liability available to a corporation has been deemed fundamental in the propagation of a capitalist economy2. However, Adam Smith underlined the restriction of competition that corporations symbolize3. The strengthening of corporate interests after the Civil War in America led President Lincoln to foresee corporate greed as follows: However the turning point for corporations appeared with the decision in the case of Santa Clara County v Southern pacific Railroad5 in which the corporation was declared to be a natural person under the U.S. Constitution entitled to the protection offered by the Bill of Rights.

By placing them on par with individual citizens in permitting their influence upon Government, the powers of the Corporations to influence legislation was therefore unequally balanced against individual powers.6 The case of Solomon v Salomon & Co Ltd7 established the corporation as a distinct legal entity in common law, with an existence and personality separate from the people that comprise it. This has provided the facility for small agencies and businesses to assume a corporate form functioning as a front that shields the agency/individuals from creditors rather than being purely directed towards raising capital for risky business purposes7a. The