The word “Corporation” derives from Latin and means “union” or “connected parts”. In the modern business terminology, the term “Corporation” is generally used to describe large companies with a complex structure and often acting internationally.
Formally, corporations are usually organized as joint stock companies or less frequently as limited ones. It means that they are officially registered as legal persons governed by their own rules and having their own assets separated from the property of corporation shareholders or employees.
A corporations is owned by its shareholders also referred to as members of the company. Shareholders can be private or/and legal persons (other companies) which have invested a certain amount of money in a corporation in return for its shares. Shareholders are financially liable for corporation obligations to the value of their shares.
Corporations may be structured and run as both commercial enterprises to maximize profit and non-profit organizations to support public or private projects.
As an incorporated body every corporation has its Articles of Association, that is an agreement between shareholders to govern the way their company is managed and corporation’s profits are shared. Rules and regulations of a company’s Articles of Association are binding regardless of the current management or shareholder composition. They apply to the shareholders and directors who may join in the corporation in the future. The Articles of Association determines the following details:
- The purpose of the corporation,
- The mode and form in which the business of the corporation is carried out,
- The rights, powers and duties of shareholders, directors and employees of the corporation,
- The mode and form in which changes of the Articles of Association can be made.
Corporation directors appointed by shareholders are responsible for the company’s day-to-day management and business activities. Directors are accountable for their decisions, up to criminal liability. The company director must be formally employed and paid by the corporation he manages. Directors can be remunerated in the form of a conventional monthly salary or annual corporate dividend. The payment details are usually regulated by a formal managerial contract concluded between shareholders and the director of their company.
While shareholders themselves do not take part in the routine management of a corporation, they determine its internal organization and long-term business strategy. These crucial decisions are customarily made at ordinary or extraordinary general meetings of shareholders, although this procedure has been not obligatory since 2007.
As a rule, corporation profits are distributed according to the amount and value of shares owned by members of the company. Shareholders can however decide to reinvest profits in the company.
Tax accountancy and bookkeeping for corporations and for their shareholders and directors is complicated and time-consuming. For this reason, Capital Business Links Ltd offers excellent corporate bookkeeping and auditing services by professional, certified ACCA and AAT accountants. We offer a comprehensive and specialized service for corporations that includes services for joint stock and limited companies, shareholders and company directors.
Learn how we can serve your corporation’s specialized needs. Contact one of our experts at 0208 567 99 44, or contact us by email using the form below.