{{Short description|Association or collection of individuals}}
{{Other uses}}
{{Redirect|Firm}}
{{Use mdy dates|date=March 2020}}
[[File:Nokia office building in Hervanta Tampere 1.jpg|thumb|An office building of [[Nokia Corporation]] in [[Hervanta]], Tampere, Finland]]
{{Companies law}}
A '''company''' is a [[Legal personality|legal entity]] representing an association of [[legal person]]s with a shared objective, such as generating profit or benefiting society. Depending on the [[jurisdiction]], companies can take on various forms, including [[voluntary association]]s, [[nonprofit organization]]s, [[List of legal entity types by country|business entities]], financial entities, [[bank]]s, and [[educational institution]]s. Companies have evolved to share common legal features, such as a [[Corporate personhood|separate legal personality]], [[limited liability]], [[Share (finance)|transferable shares]], [[Equity (finance)|investor ownership]], and a [[Management|managerial hierarchy]].[{{Cite journal |last=Turner |first=John D. |date=2024-01-30 |title=Three centuries of corporate governance in the United Kingdom |journal=The Economic History Review |volume=78 |pages=3–29 |doi=10.1111/ehr.13326 |issn=0013-0117|doi-access=free }}]
The term "company" may or may not be synonymous with [[corporation]], [[partnership]], firm, or [[society]]. Companies are governed by [[Corporate law|company law]], also referred to as corporate law in many regions. Incorporated companies are created through [[State (polity)|state]] registration,[''[[Case of Sutton's Hospital]]'' (1612) [http://oll.libertyfund.org/?option=com_staticxt&staticfile=show.php%3Ftitle=911&chapter=106352&layout=html&Itemid=27#c_lf0462-01_footnote_nt_1101 10 Rep 32]; 77 Eng Rep 960, 973]the Corporation itself is onely ''in abstracto'', and resteth onely in intendment and consideration of the [[Law]]; for a Corporation aggregate of many is [[invisible]], [[Immortality|immortal]], & resteth only in intendment and consideration of the Law; and therefore it cannot have predecessor nor successor. They may not commit [[treason]], nor be outlawed, nor [[excommunicate]], for they have no [[soul]]s, neither can they appear in person, but by [[Lawyer|Attorney]]. A Corporation aggregate of many cannot do [[fealty]], for an invisible body cannot be in person, nor can swear, it is not subject to imbecilities, or death of the natural, [[Human body|body]], and divers other cases.
In 1776, [[Adam Smith]] wrote in the ''[[Wealth of Nations]]'' that mass corporate activity could not match private entrepreneurship, because people in charge of "other people's money" would not exercise as much care as they would with their own.[A Smith, ''[[An Inquiry into the Nature and Causes of the Wealth of Nations]]'' (1776) [http://www.ibiblio.org/ml/libri/s/SmithA_WealthNations_p.pdf Book V, ch 1, para 107]]
In 1843, [[William Ewart Gladstone|William Gladstone]] took chairmanship of a Parliamentary Committee on Joint Stock Companies, which led to the [[Joint Stock Companies Act 1844]].[Report of the Parliamentary Committee on Joint Stock Companies (1844) British Parliamentary Papers vol VII]
=== United States ===
At the end of the 19th century in the United States, the law allowed for the concentration of wealth and power in the hands of a few people, or a single person. In response, the [[Sherman Antitrust Act]] of 1890 was created to break up big business conglomerates, and the [[Clayton Act]] of 1914 gave the government power to halt [[mergers and acquisitions]] that could damage the public interest. By the end of the [[First World War]], it was increasingly perceived that ordinary people had little voice compared to the "financial oligarchy" of bankers and industrial magnates.[See [[L Brandeis]], ''[[Other People's Money And How the Bankers Use It]]'' (1914)] In particular, employees lacked voice compared to shareholders, but plans for a post-war "[[industrial democracy]]" (giving employees votes for investing their labor) did not become widespread.[The Massachusetts governor [[Calvin Coolidge]] passed "An Act to enable manufacturing corporations to provide for the representation of their employees on the board of directors" (April 3, 1919) Chap. 0070. This was a measure that allowed corporations to voluntarily give workers votes. It remains in the Massachusetts Laws, General Laws, Part I Administration of the Government, Title XII Corporations, ch 156 Business Corporations, §23]
The [[Wall Street crash|Wall Street crash of 1929]] saw the total collapse of stock market values, as shareholders realized that corporations had become overpriced. They sold shares ''en masse'', meaning many companies found it hard to get finance. The result was that thousands of businesses were forced to close, and they laid off workers. Because workers had less money to spend, businesses received less income, leading to more closures and lay-offs. This downward spiral began the [[Great Depression]].[AA Berle, 'For Whom Corporate Managers Are Trustees: A Note' (1932) [https://www.jstor.org/stable/pdf/1331920 45(8) Harvard Law Review 1365], 1372. See also the [[Berle-Dodd debate]].] This led directly to the [[New Deal]] reforms of the [[Securities Act of 1933]] and [[Securities and Exchange Act of 1934]]. A new [[Securities and Exchange Commission]] was empowered to require corporations disclose all material information about their business to the investing public.[{{Cite journal |last=Berle |first=A. A. |date=May 1931 |title=Corporate Powers as Powers in Trust |url=https://www.jstor.org/stable/1331341?origin=crossref |journal=Harvard Law Review |volume=44 |issue=7 |pages=1049 |doi=10.2307/1331341|url-access=subscription }}]
After [[World War II]], a general consensus emerged that directors were not bound purely to pursue "[[shareholder value]]" but could exercise their discretion for the good of all stakeholders, for instance by increasing wages instead of dividends, or providing services for the good of the community instead of only pursuing profits, if it was in the interests of the enterprise as a whole.[e.g. ''[[AP Smith Manufacturing Co v Barlow]]'', 13 N.J. 145, 98 A.2d 581, 39 ALR 2d 1179 (1953) and ''[[Shlensky v Wrigley]]'', 237 N.E. 2d 776 (Ill. App. 1968)] However, different states had different corporate laws. To increase revenue from [[corporate tax]], individual states had an incentive to lower their standards in a "[[race to the bottom]]" to attract corporations to set up their headquarters in the state, particularly where directors controlled the decision to incorporate. "[[Charter competition]]", by the 1960s, had led Delaware to become home to the majority of the largest US corporations. This meant that the case law of the [[Delaware Chancery Court|Delaware Chancery]] and [[Delaware Supreme Court|Supreme Court]] became increasingly influential.
During the 1980s, a huge takeover and merger boom decreased directors' accountability. To fend off a takeover, courts allowed boards to institute "poison pills" or "[[shareholder rights plan]]s", which allowed directors to veto any bid – and probably get a payout for letting a takeover happen. More and more people's retirement savings were being invested into the stock market, through [[pension fund]]s, [[life insurance]] and [[mutual fund]]s. This resulted in a vast growth in the [[asset management]] industry, which tended to take control of voting rights. Both the financial sector's share of income, and executive pay for chief executive officers began to rise far beyond real wages for the rest of the workforce. The [[Enron scandal]] of 2001 led to some reforms in the [[Sarbanes-Oxley Act]] (on separating auditors from consultancy work). The [[2008 financial crisis]] led to minor changes in the [[Dodd-Frank Act]] (on soft regulation of pay, alongside [[derivative]] markets). However, the basic shape of corporate law in the United States has remained the same since the 1980s.
==Terminology and definition==
A company can be defined as an "artificial person", invisible, intangible, created by or under law,[
Compare a definition of a corporation: ''"Perhaps the best definition of a corporation was given by Chief Justice John Marshall in a famous Supreme Court decision in 1819. A corporation, he said, 'is an artificial person, invisible, intangible, and existing only in contemplation of the law.' In other words, a '''corporation''' [...] is an artificial person, created by law, with most of the legal rights of a real person."''
{{cite book |last1=Pride |first1=William M. |url=https://books.google.com/books?id=zb0cItqvLJUC |title=Business |last2=Hughes |first2=Robert J. |last3=Kapoor |first3=Jack R. |publisher=Cengage Learning |year=1985 |isbn=9780324829556 |edition=10 |series=CengageNOW Series |location=Mason, Ohio |publication-date=2009 |page=116 |chapter=4: Choosing a form of business ownership |access-date=20 Apr 2019}}] with a discrete [[legal capacity]] (or "personality"), [[perpetual succession]], and a [[Company seal|common seal]]. Except for some senior positions, companies remain unaffected by the death, insanity, or [[insolvency]] of an individual member.
===Etymology===
The English word, "''company''", has its origins in the [[Old French]] term {{Lang|fro|compagnie}} (first recorded in 1150), meaning "society, friendship, intimacy; body of soldiers",[12th century: {{OEtymD|company}}] which came from the [[Late Latin]] word {{Lang|la|companio}} ("one who eats bread with you"), first attested in the [[Salic law]] ({{circa}} AD 500) as a [[calque]] of the [[Germanic languages|Germanic]] expression {{Lang|frk|gahlaibo}} (literally, "with bread"), related to [[Old High German]] {{Lang|goh|galeipo}} ("companion") and to [[Gothic language|Gothic]] {{Lang|got|gahlaiba}} ("messmate").
=== Semantics and usage ===
By 1303, the word company referred to [[Guild|trade guilds]].[
Compare:
{{OEtymD|company}} - '[...] the word having been used in reference to trade guilds from late 14c.'
] The usage of the term ''company'' to mean "business association" was first recorded in the 1550s,[
Compare:
{{OEtymD|company}} - 'From late 14c. as "a number of persons united to perform or carry out anything jointly," which developed a commercial sense of "business association" by 1550s, the word having been used in reference to trade guilds from late 14c.'
] and the abbreviation "co." dates from 1769.[
Compare:
{{OED|co}} - "1759 Compl. Let.-writer (ed. 6) London: Printed for Stanley Crowder, and Co."
][
Compare:
{{OEtymD|co.}} - 'by 1670s as an abbreviation of company in the business sense, indicating the partners in the firm whose names do not appear in its name. Hence and co. to indicate "the rest" of any group (1757)'.
]
In [[English law]], a company is a body corporate or corporation company registered under the [[United Kingdom company law|Companies Acts]] or under similar legislation.[{{Cite web |title=Companies Act 2006 |url=http://www.legislation.gov.uk/ukpga/2006/46/section/1/data.htm |url-status=live |archive-url=https://web.archive.org/web/20140209204941/http://www.legislation.gov.uk/ukpga/2006/46/section/1/data.htm |archive-date=2014-02-09 |access-date=March 15, 2020 |work=[[legislation.gov.uk]]}}]
=== Nomenclature ===
* Limited and unlimited companies
** A limited company is a "company in which the liability of each shareholder is limited to the amount individually invested".[[[Black's Law Dictionary]]. Second Pocket Edition. Bryan A. Garner, editor. West. 2001.] An unlimited company is a company with no limit on the liability of its members.[{{cite web |date=15 July 2024 |title=Incorporation and names |url=https://www.gov.uk/government/publications/incorporation-and-names/incorporation-and-names#incorporating-a-new-company |access-date=13 August 2025 |website=[[Companies House]] |at=1.3 Types of company}}]
* Private and public companies
** A public company is a company whose [[Share (finance)|shares]] may be traded publicly.[{{cite web |last=Fernando |first=Jason |title=What Is an LLC? Limited Liability Company Structure and Benefits Defined |url=https://www.investopedia.com/terms/l/llc.asp |date=2026-02-09 |access-date=2026-03-05 |work=[[Investopedia]]}}]