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Corporate Governance: The Basic Legal Framework

posted May 30, 2013, 8:24 PM by Bryan Berson   [ updated Sep 13, 2014, 6:01 PM ]

Corporations are legal entities and one of several ways to structure a business.  All corporate stakeholders should have a solid grasp of basic corporate governance.  Owners, managers, and shareholders should understand their rights and responsibilities.

Incorporators, or promoters, form a corporation by filing a certificate (i.e., articles of incorporation, charter) with a state’s department of state.  Often, they choose the state that will be a company’s primary place of business.  Many companies incorporate in Delaware.  Its law gives management great flexibility to manage internal affairs, and the Delaware Court of Chancery has developed a vast amount of corporate law jurisprudence.  (In 2002-03, I was a Chancery law clerk.)  Corporations that operate outside their state of incorporation may need to register locally as a foreign corporation and pay a fee.

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