<P> AA Berle and GC Means, The Modern Corporation and Private Property (1932) Book I, ch IV, 64 </P> <P> The Wall Street Crash saw the total collapse of stock market values, as shareholders realized that corporations had become overpriced . They sold shares en masse, meaning meant 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 . Berle and Means argued that under - regulation was the primary cause in their foundational book in 1932, The Modern Corporation and Private Property . They said directors had become too unaccountable, and the markets lacked basic transparency rules . 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 . Because many shareholders were physically distant from corporate headquarters where meetings would take place, new rights were made to allow people to cast votes via proxies, on the view that this and other measures would make directors more accountable . Given these reforms, a major controversy still remained about the duties that corporations also owed to employees, other stakeholders, and the rest of society . After World War Two, 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 . 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 and 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 plans", 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 funds, life insurance and mutual funds . 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 global financial crisis of 2007 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 . </P> <P> Corporations are invariably classified as "legal persons" by all modern systems of law, meaning that like natural persons, they may acquire rights and duties . A corporation may be chartered in any of the 50 states (or the District of Columbia) and may become authorized to do business in each jurisdiction it does business within, except that when a corporation sues or is sued over a contract, the court, regardless of where the corporation's headquarters office is located, or where the transaction occurred, will use the law of the jurisdiction where the corporation was chartered (unless the contract says otherwise). So, for example, consider a corporation which sets up a concert in Hawaii, where its headquarters are in Minnesota, and it is chartered in Colorado, if it is sued over its actions involving the concert, whether it was sued in Hawaii (where the concert is located), or Minnesota (where its headquarters are located), the court in that state will still use Colorado law to determine how its corporate dealings are to be performed . </P> <P> All major public corporations are also characterized by holding limited liability and having a centralized management . When a group of people go through the procedures to incorporate, they will acquire rights to make contracts, to possess property, to sue, and they will also be responsible for torts, or other wrongs, and be sued . The federal government does not charter corporations (except National Banks, Federal Savings Banks, and Federal Credit Unions) although it does regulate them . Each of the 50 states plus DC has its own corporation law . Most large corporations have historically chosen to incorporate in Delaware, even though they operate nationally, and may have little or no business in Delaware itself . The extent to which corporations should have the same rights as real people is controversial, particularly when it comes to the fundamental rights found in the United States Bill of Rights . As a matter of law, a corporation acts through real people that form its board of directors, and then through the officers and employees who are appointed on its behalf . Shareholders can in some cases make decisions on the corporation's behalf, though in larger companies they tend to be passive . Otherwise, most corporations adopt limited liability so that generally shareholders cannot be sued for a corporation's commercial debts . If a corporation goes bankrupt, and is unable to pay debts to commercial creditors as they fall due, then in some circumstances state courts allow the so - called "veil of incorporation" to be pierced, and so to hold the people behind the corporation liable . This is usually rare and in almost all cases involves non-payment of trust fund taxes or willful misconduct, essentially amounting to fraud . </P>

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