Limited Liability to Shareholders
Limited Liability of Shareholders
Billy v. Consolidated Mach.Too l. Corp., 51 N.Y.2d 152, 412 N.E.2d 934, 432 N.Y.S2d 879, Web 1980 N.Y. Lexis 2638; Limited Liability of Shareholders 16.1, at page 305 (Court of Appeals of New York)
A corporation is a legal entity created according to statutory requirements and ranges from one to thousands of owners (Cheeseman, 2010). The major characteristics of a corporation are free transferability of shares, perpetual existence, centralized management, and limited liability of shareholders.
To form a corporation it must be created pursuant to the laws of the state in which it will be incorporated (Cheeseman, 2010). Financing of the corporation can be done by selling stock or part of what the corporation is worth.
Directors, officers, and shareholders all have obligation they must adhere by to avoid being accused of torts. Shareholders elect directors and vote on any important issues that affect the corporation. The corporation directors are responsible for hiring officers and creating policy judgments. The officers of the corporation make sure the corporation runs effectively. Unlike shareholders the officers and directors can be held responsible for breach of the duties of loyalty and care.
The Sarbanes-Oxley Act applies to corporations, public companies, and nonprofit organizations. The Sarbanes-Oxley Act make certain that the Chief Executive Officer and Chief Financial Officer file a statement with the annual and quarterly report, this report states that the person who signed, reviewed said report.
A multinational company operates in two or more countries with no borders. The operation of these companies uses branch offices and subsidiary corporations. A branch offices is not a separate entity, the corporation is still responsible for any contracts, torts, and employees. The subsidiary corporation is solely responsible for any torts, contracts, and employees. The subsidiary corporations fall under all the rules and regulations of the country it operates in.
Joseph M. Billy was an employee of the USM Corporation a publicly held corporation. Billy was at work when a 4,600-pound ram from a vertical boring mill broke loose and crushed Billy to death. Billy’s wife sued USM, alleging the accident was caused by certain defects in the manufacture and design of the vertical boring mill the two moving parts involved in the accident, a metal lifting arm and the 4,600-pound ram.
Even though a shareholder is part of the corporation it does not make him or her liable of mishaps at