Despite not being human beings, corporations, as far as the law s concerned, are legal persons, and have many of the same rights and responsibilities as natural people do. Corporations can exercise human rights against real Individuals and the and they can themselves be responsible for human rights violations. [7] Corporations can be “dissolved” either by statutory operation, order of court, or voluntary action on the part of shareholders.
Insolvency may result in a form of corporate failure, when creditors force the liquidation and dissolution of the corporation under court but it most often results in a restructuring of corporate holdings. Corporations can even be convicted of criminal offenses, such as fraud and manslaughter. However corporations are not considered living entities in the way that humans are. [9]Many European nations chartered corporations to lead colonial ventures, such as the Dutch East India Company or the Hudson Bay Company. These chartered companies became the progenitors of the modern corporation.
Acting under a charter sanctioned by the Dutch government, the Dutch East India Company defeated Portuguese forces and established Itself In the Molecule Islands In order to profit from the European demand for spices. Investors in the VOCE were issued paper certificates as proof of share ownership, and were able to trade their shares on the original Amsterdam stock exchange. Shareholders are also explicitly granted limited liability in the company’s royal charter. [12] In England, the government created corporations under a Royal Charter or an Act of Parliament with the grant of a monopoly over a specified territory.
The best known example, established in 1600, was the British East India Company. Queen Elizabeth I granted it the exclusive right to trade with all countries to the east of the Cape of Good Hope. Corporations at this time would essentially act on the government’s behalf, bringing in revenue from Its exploits abroad. Subsequently the Company became Increasingly integrated with British military and colonial policy, Just as most UK corporations were essentially dependent on the British navy’s ability to control trade routes.
Labeled by both contemporaries and historians as “the grandest symbolize the dazzlingly rich potential of the corporation, as well as new methods of business that could be both brutal and exploitative. [13] On 31 December 1600, the English monarchy granted the company a 1 5-year monopoly on trade to and from the East Indies and Africa. [14] By 1611, shareholders in the East India Company were earning an almost 150% return on their investment. Subsequent stock offerings demonstrated Just how lucrative the Company had become.
Its first stock offering in 1613-1616 raised IEEE,OHO, and its second offering in 1617-1622 raised El . 6 million. [15] A similar chartered company, the South Sea Company, was established in 1711 to trade in the Spanish South American colonies, but met with less success. The South Sea Company’s monopoly rights were supposedly backed by the Treaty of Utrecht, signed in 1713 as a settlement following the War of Spanish Succession, which gave the United Kingdom an easement to trade in the region for thirty years. In fact the Spanish remained hostile and let only one ship a year enter.
Unaware of the problems, investors in the I-J, enticed by extravagant promises of profit from company promoters bought thousands of shares. By 1717, the South Sea Company was so wealthy (still having done no real business) that it assumed the public debt of the I-J government. This accelerated the inflation of the share price further, as did he Bubble Act 1720, which (possibly with the motive of protecting the South Sea Company from competition) prohibited the establishment of any companies without a Royal Charter.
The share price rose so rapidly that people began buying shares merely in order to sell them at a higher price, which in turn led to higher share prices. This was the first speculative bubble the country had seen, but by the end of 1720, the bubble had “burst”, and the share price sank from IOW to under OHIO. As bankruptcies and recriminations ricocheted through government and high society, the mood against corporations, and errant directors, was bitter.
