Corporate Litigation

To understand what corporate litigation is, we must have a clear idea of corporate law. It is the body of statutes, regulations, rules, case authorities, and practices governing the rights, relations and conduct of entities, businesses, organizations, and persons. It regulates how corporations and other business entities interact with their owners, management, employees and third parties.

Corporate litigation involves the resolution of disputes between a company and entities or persons directly involved in it. Corporate litigation matters may occur throughout the lifecycle of the entity, from its formation and funding and its governance and dissolution.

Examples of corporate litigation
  1. A dispute between the company and its shareholders
  2. A dispute over the power and decision-making within the company
  3. A dispute related to the procedures for mergers, acquisitions,, conversions, or dissolutions
  4. A dispute related to the appointment and removal of directors and officers
  5. A breach of contract with another business
By its nature, a corporation is a separate legal entity independent from the shareholders that own it. Generally, the shareholders in  a corporate litigation cannot lose more than their investment in the corporation. This is one of the major characteristics of corporate law, which we’ve discussed briefly below.

Characteristics of Corporate Law

Corporate law follows certain common principles:

A distinct legal personality

As already explained, a corporation is a distinct legal entity separate and apart from its shareholder owners, acts and obligations of the corporation are of the corporation alone, and not acts and obligations of its individual shareholders.

Limited liability

A corporation protects its owners from personal liability. Under corporate law, shareholders are not generally personally responsible for claims against the corporation.

Transferable shares

Should a shareholder no longer want to retain their ownership in the corporation, the corporation can continue. The individual can transfer shares in accordance with a written agreement on shares transferability, or in accordance with law..

Delegated management

A corporation’s structure consists of three main groups: shareholders, directors, and officers. Shareholders elect a board of directors to maintain strategic oversight over operations. The board of directors appoints officers to run daily operations. Directors, officers, and controlling shareholders are fiduciaries of the corporation, owing a duty of loyalty and care to the corporation and its shareholders. Officers and directors may be sued for the actions they take during the course of their employment in breach of these duties.

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