Company (law) - Definition and Overview

In UK law, a company is an artificial legal person with a separate identity from its members. Its directors, stockholders and employees are connected to the company by a network of contracts, but, in law, the company is regarded as separate from them. Incorporated companies normally have limited liability - their shareholders and directors are not normally responsible for the company's debts beyond the amount they paid for their shares.

In US law, a company is any group of people united to pursue a common interest. This term in general is synonymous with association, but more often it is used specifically to identify for-profit associations, such as the partnership, the joint-stock company, and the for-profit corporation.

In most jurisdictions, companies are bound by law to maximise value for their shareholders, meaning they can only consider other stakeholders if doing so would create value for their shareholders, or if their shareholders vote to accept reduced profits to pursue some wider objective. In practice, major listed corporations are controlled by investment banks who, in turn, are under an obligation to maximise value for their investors, and listed corporations are obliged to maximise their profits at the expense of other stakeholders. This aspect of the company form has been widely criticised for forcing companies to put profits before people.

See also

• Types of companies
• Lists of companies
• Company Law Reform
• Organization