The Concept of Corporate Personality Essay Example | Topics and Well Written Essays - 2250 words

The Concept of Corporate Personality - Essay Example But over time, the concept was gradually given to all sorts of organizations engaged in commercial ventures such as trading companies, consortia for roadway construction projects, groups formed to undertake public infrastructure but funded by a private group of individuals (Hoffman 18) and the so-called parastatals or government-owned corporations. The category of parastatal can mean also a state-owned enterprise (SOE) which is similar to government-owned and controlled corporations (GOCCs). Either, both are formed specifically to operate in commercial ventures but with a public-interest nature in them such as building bridges, tollways, waterworks and sewerage systems which affect the entire community rather than just a small group of people. An SOE or GOCC is, therefore, the same as a private stock company in terms of issuing shares of stocks but only in this instance, the state either holds all the shares or a majority thereof. As a stock company, it has an inherent obligation to give a decent return on investment (ROI) to its investors from the tolls or tax revenues it is able to raise by virtue of being a stock company; UK laws often require golden shares retained (Mahoobi 107). Because the law now allows an organization like a commercial corporation to acquire a legal personality separate from the personalities of the members who formed a corporation, it has created a new but extremely important legal technicality. With this concept of a separate personality, the corporation separately on its own can acquire or buy assets and in same way or manner also incur debts in the course of its operations. This gave rise to another concept which is limited liability. This simply means the creditors of a corporation, in the event it goes bankrupt, can run after the assets of that bankrupt corporation in the hope of satisfying debts or credits it had extended to the corporation in the ordinary course of business.