Most state corporation statutes also operate under the assumption that each corporation will adopt bylaws to define the rights and obligations of officers, persons and groups within its structure. States also have registration laws requiring corporations that incorporate in other states to request permission to do in-state business.
The law treats a corporation as a legal “person” that has the standing to sue and be sued, distinct from its stockholders. The legal independence of a corporation protects shareholders from being personally liable for corporate debts in most instances. It also allows stockholders to sue the corporation through a derivative suit and makes ownership in the company (shares) easily transferable. The legal “person” status of corporations gives the business perpetual life; deaths of officials or stockholders do not alter the corporation’s structure.
Corporations are taxable entities that fall under a different scheme from individuals. Although corporations have a “double tax” problem –both corporate profits and shareholder dividends are taxed — corporate profits are taxed at a lower rate than rates for individuals.
Corporate law has important intersections with contracts and commercial transactions law.