PUBLIC CORPORATION

2013
PUBLIC CORPORATION

HIRA MEHWISH Roll No: 36 Submitted to: Sir Sabahat M.com final year 1|Page 5/30/2013

PUBLIC CORPORATION

Public Corporation:
Introduction:
Corporation:
An artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence.

Classes of Corporations:
Private Corporation -those formed for some private purpose, benefit, aim or end. DEFINITION Public Corporation -one created by the State either by general or special act for purposes of administration of local government or rendering service in the public interest. -established for purposes connected with the administration of civil or local governments -creations of the State either by general or special act -involuntary consequence of legislation

-created for private aim, gain, or benefits of its members -created by the will of the incorporators with the recognizance of the State. -constitute a voluntary agreement by and among its members.

PURPOSE OF CREATION CREATORS

NATURE

Public corporation:
Definitions:

A corporation, owned and operated by a government, established for the administration of certain public programs. A large private corporation with many shares, which are sold to the public or traded on a stock exchange.

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A company whose shares are publicly traded and are usually held by a large number (hundreds or thousands) of shareholders. The usual British term is public limited company. A government owned company such as an airline or public transit company.

EXPLANATION:

"Public corporation" means an entity that is created by the state to carry out public missions and services. In order to carry out these public missions and services, a public corporation participates in activities or provides services that are also provided by private enterprise. A public corporation is granted increased operating flexibility in order to best ensure its success, while retaining principles of public accountability and fundamental public policy. The board of directors of a public corporation is appointed by the Governor and confirmed by the Senate but is otherwise delegated the authority to set policy and manage the operations of the public corporation.

A public corporation is a corporate body created by the special Act of the parliament. Such Act defines the power, duties, privileges and pattern of management of these organisations. Such an organisation is a statutory body to serve the general public. A public corporation is clothed with the power of the government, but possessed with flexibility and initiative of private enterprises. A public corporation enjoys complete autonomy in management.

Nature Of Public Corporations:

A public corporation is a corporation formed by the state for purposes of local government and administration.1 Public corporations are divided into municipal corporations and the organizations of less extensive powers, such as counties, school districts and the like known as quasi corporations. Municipal corporations are those public corporations which have extensive powers of local government, including the power of making local laws. Quasi corporations have limited powers of government or administration, and lack the power of making local laws.2 The difference in powers between municipal corporations and quasi corporations often leads to
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important distinctions in the validity of their contracts. The difference in name is unimportant. A county may be included under the term "municipal or other corporation."

Example:
a Public Corporation is a company that you can publicly purchase stock from = any company that is on the NYSE (New York Stock Exchange) or NASDEQ is a public corporation. You can go to their website and download the most recent edition of their annual report to get what you are looking for. Examples of public corporations: Disney Apple Microsoft CocaCola Yum Foods (Taco Bell, KFC, Pizza Hut, Long John Silvers, & A&W) Hot Topic (the clothing stores)

Features:

The followings are some of the essential characteristics of public corporation: i. It is a corporate body created by the special act in the state or central legislature. The power and duties of these corporations are defined by this Act. ii. It enjoys the status of a legal entity and as such it can enter into contract in its own name. iii. It is completely owned by the government and as such no private individuals are entitled to purchase shares of these organisations. iv. A public corporation is managed by a board of directors. The members of the board are from all walks of industry and commerce. The chairmen of these corporations are appointed by the government. v. The entire capital is financed by the government. It was set up with a capital of its own and is entitled to borrow, use and re-use revenue from the sale of goods. vi. A public corporation is primarily meant to render service and making profit is its secondary considerations.

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vii. The employees of corporation are subject to service conditions laid down by the corporation. Civil service rules for the government do not apply to the employees of the corporation.

Advantages:
A public corporation enjoys a substantial advantage over other forms of public enterprises. The following are some of the advantages of public corporations: i. A public corporation is able to manage its affairs with independence, initiative because it is an autonomous set up. ii. It is relatively free to adapt to changing circumstances because of its autonomy nature. iii. It maintains continuous existence in spite of changes in the government. iv. It leads to high morale among the executives and other employees because of least government interference. v. It can utilize the service of competent persons because it has its own cadres of employees. vi. The board of directors consists of experts from business, labour and consumers. So a board of director can give better advice for the operation of the corporation. vii. Since public corporations are accountable to the parliament, they are intended to render maximum service to the public instead of maximum profit.

Disadvantages:
Recently, I wrote about the advantages of taking a company public but as you know, whatsoever has an advantage has a corresponding disadvantage. Though you might call them disadvantages, I prefer to call them challenges. I hope you know that forming a public corporation is the same as taking a company public. Below are 7 reasons why most entrepreneurs shy away from forming a public corporation or taking their company public. 1. The management structure in a public corporation is usually decentralized so therefore the managers are in most cases not the business owners. Since they are managers, they may not be motivated towards the company's goal and vision as the entrepreneur that created the business.

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While the entrepreneur may be driven by the desire to fill a need and build a successful business, the manager may be driven by bonus, incentives, job title, promotion and the salary, not the entrepreneur's vision. 2. Taking a company public is very expensive due to legal fees, meeting up with the demand of government agencies and regulatory bodies and also the cost of undertaking an IPO (Initial Public Offer) adds to the burden. 3. When you take your company public, you now have to serve three bodies. You will now have to serve your customers, government agencies or regulatory and the investors. This might be too cumbersome or stressful for some entrepreneurs to handle. 4. Public Corporations are subjected to more legal restrictions than other type of entities. 5. When you take a company public, your company becomes subjected to stiff accounting rules and principles. 6. When you form a public corporation, your business affairs and financial statements can't be kept secret any longer. It must be published to the public at large. 7. Public corporations are subjected to heavy corporate tax. They pay both federal and state tax. Public corporations are also subjected to double taxation. They are taxed based on their earnings and the shareholders are taxed based on their dividend. In conclusion, I want you to also know that public corporations face severe penalties if they go wrong or mis-inform the public, so professionalism and transparency are the rules of the game. However, if you are daring, you might decide to take your company public. It is all part of the challenges of entrepreneurship. Till I come your way again, keep your entrepreneurial spirit strong.

A local government is a "political subdivision of a nation or state which is constituted by law and has substantial control of local affairs." The Local Government Code of 1991 defines a local government unit as a "body politic and corporate"-- one endowed with powers as a political subdivision of the National Government and as a corporate entity representing the inhabitants of its territory. Local government units are the provinces, cities, municipalities and barangays. They are also the territorial and political subdivisions of the state

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CLASSES OF PUBLIC CORPORATIONS:

(i) Quasi-corporation created by the State for a narrow/limited purpose (PCSO, etc.); Municipal Corporations body politic and corporate constituted by the incorporation of the inhabitants for the purpose of local government.

(ii)

Quasi-corporation:
Definitions:
A corporation consisting of a person or body of persons invested with some of the qualities of an artificial person, though not expressly incorporated, esp. the official of certain municipal divisions such as counties, schools districts, and the towns of some States of the United States, certain church officials, as a churchwarden, etc. A quasi corporation generally refers to an entity that exercises some of the functions of a corporation, but has not been granted separate legal personality by statute, particularly a public corporation with limited authority and powers such as a county or school district. In the United States such entities are often referred to as quasi-municipal corporations.

It created as agencies of the State for narrow and limited purposes without the powers and liabilities of self-governing corporations.

Q: What is Quasi corporation? Explanation:

Organizations resembling corporations; municipal societies or similar bodies which, though not true corporations in all respects, are yet recognized, by statutes or immemorial usage, as persons or aggregate corporations, with precise duties which may be enforced, and privileges which may be maintained, by suits at law. They may be considered quasi corporations, with limited powers, co-extensive with the duties imposed upon them by statute or usage, but restrained from a general use of the authority which belongs to those metaphysical persons by the common law. Scates v. King, 110 111. 456; Adams v. Wise-asset Bank, 1 Me. 361, 1 Am. Dec. 88; Lawrence County v. Railroad Co., 81 Ky. 227; Barnes v. District of Columbia, 91 U. S. 552, 23 L. Ed. 440. This term is lacking in definiteness and precision. It appears to be applied indiscriminately (a) to all kinds of municipal corporations, the word quasi being introduced because it is said that these are not voluntary organizations like private corporations, but created by the legislature for
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its own purposes and without reference to the wishes of the people of the territory affected ; (b) to all municipal corporations except cities and incorporated towns, the latter being considered the only true municipal corporations because they exist and act under charters or statutes of incorporation while counties, school districts, and the like are merely created or set off under general laws; (c) to municipal corporations possessing only a. low order of corporate existence or the most limited range of corporate powers, such as hundreds in England, and counties, villages, and school districts in America.

Municipal corporation:
Definitions:
A city, town, village, etc., that operates under a corporate charter granted by the state

A municipal corporation is the legal term for a local governing body, including (but not necessarily limited to) cities, counties, towns, townships, charter townships, villages, and boroughs.

Municipal incorporation occurs when such municipalities become self-governing entities under the laws of the state or province in which they are located. Often, this event is marked by the award or declaration of a municipal charter. With the notable exception of the City of London Corporation, the term has fallen out of favour in the United Kingdom, but the concept remains central to local government in the United Kingdom, as well as former British colonies such as India and Canada.

Explanation :
An incorporated political subdivision of a state that is composed of the citizens of a designated geographic area and which performs certain state functions on a local level and possesses such powers as are conferred upon it by the state. A municipal corporation is a city, town, village, or borough that has governmental powers. A municipality is a city, town, village, or, in some states, a borough. A corporation is an entity capable of conducting business. Cities, towns, villages, and some boroughs are called municipal corporations because they have the power to conduct business with the private sector. Generally, the authority to govern the affairs within a state rests with the state legislature, the governor, and the state judicial system. However, states give localities limited powers to govern
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their own areas. The origin of the municipal corporation varies from state to state. Municipal corporations are given the power to govern through either the state constitution or state statutes, or through the legislative grant of a charter. States give municipalities the power to create an official governmental body, such as a board or council. Members of this body are elected by voters who live within the voting boundaries of the municipality. The local body has the power to pass ordinances, or local laws. These laws may not conflict with state or federal laws. Most states grant so-called home rule powers to municipalities in the state constitution and state statutes. Home rule is a flexible grant of power from the state to the voters of a municipality. The first grant of home rule was given to the city of St. Louis in 1875 when the state of Missouri created a new state constitution that gave the city the power to create its own government. Home rule gives municipalities the power to determine their own goals without interference from the state legislature or state agencies. It gives municipalities room to experiment with new approaches to government without first seeking approval from the state. It also allows municipalities to act more quickly on issues of local concern because they do not have to seek approval for their actions from the state legislature. Although home rule powers are broad, in no event may a municipality enact a law that is specifically precluded by state law or that is contrary to state law. For example, a municipality may not vote to decriminalize narcotics that are illegal under state law. It may, however, strengthen existing state laws. For instance, a municipality may act to restrict the sale of alcohol to a greater degree than is done in other municipalities. The alternative to home rule is Dillon's Rule, a set of principles related to municipal power formulated by the influential jurist John Forest Dillon in 1872. Under Dillon's Rule, municipalities exercise only the limited powers specifically granted by the state, the powers necessary to carry out the specifically granted powers, and the powers indispensable to the declared purposes of the municipality. Few states rely on Dillon's Rule, and the trend among states is to give municipalities more power in deciding local issues. The governmental authority most commonly exercised by municipalities is the Police Power. The term police power does not refer to the authority to create police departments, although it does include that power. Police power is the power of state and local governments to enact laws governing health, safety, morals, and general public welfare. On the local level, such ordinances range from the provision of local police to Zoning laws to laws on domestic partnerships. The authority of states to exercise police power can be found in the Tenth Amendment to the U.S. Constitution. States, in turn, grant police power to municipalities, and the municipalities exercise that power within their respective borders. The grant of police power from the state to municipalities can be found in state constitutions or state statutes. States also commonly give their municipalities the power to enter into contracts. This power can be exercised only by action of the local governing body. The body must give notice of its intent to hire a private party for local government work. For example, if a municipality seeks a contractor to construct a building, the municipality must publish a notice of its intentions in a

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local newspaper and post other notices in public places. A municipality should not hire a private company if a member of the governing body has a financial interest in the company. A municipality must exercise ordinary and reasonable care in providing safe public places and safe public services. If a municipality fails to exercise reasonable care, it may be held liable for resulting injuries. For example, if a person falls through a manhole and into the sewer, the city may be liable for any injuries resulting from the fall if the manhole cover was not secure. In this respect, a municipality may be liable for its Negligence just like an individual. The most common TORT cases against municipalities are based on personal injuries caused by defects or obstructions in public streets, sidewalks, drains, and sewers. Since the 1960s, cities across the United States have begun to decay because of lack of resources. To increase municipal resources, cities have imposed a variety of fees on private developers. Such fees include charges for building permit approvals, plat approvals, and water or sewer connection; impact fees that take into account future costs of a development; and special assessments for benefits given to a developer by the city. For example, a city may impose a transportation exaction fee on the developer of a residential subdivision to pay for the laying and maintenance of new roads that must be built to serve the subdivision. Developers have argued that such fees force private parties to pay for public functions, and they have attacked the fees as being beyond the power of the city government. In some cases their challenges have been upheld. Municipal corporations are an important feature of the political structure of the United States. Incorporating a municipality gives it the freedom to form a society that is distinct from other localities in the state and around the country. This idea of local control is the same concept that animates the constitutional division of the country into a collection of smaller states. By giving municipalities some autonomy, individuals are more capable of participating in politics and gaining a measure of control over their lives than if political activity occurred only on the federal and state levels

Elements: Municipal Corporations:

A legal creation or incorporation A corporate name by which the artificial personality or legal entity is known and in which all corporate acts are done Inhabitants constituting the population who are invested with the political and corporate power which are executed through duly constituted officers and agents A place or territory within which the local civil government and corporate functions are exercised
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DUAL NATURE & FUNCTIONS OF MUNICIPAL CORPORATIONS:

Every local government unit created/organized under the Local Government Code is a BODY POLITIC and CORPORATE endowed with powers to be exercised by it in conformity with law. As such it shall exercise powers as a political subdivision of the National Government and as a corporate entity representing the inhabitants of the territory (Section 15, RA7160). Accordingly, it has dual functions

(i)

public or governmental acts as an agent of the State for the government of the territory and the inhabitants; and

(ii)

private or proprietary acts as an agent of the community in the administration of local affairs, as such, acts as a separate entity for its own purposes and not as a subdivision of the State.

Chart Schedule of classes of Public corporation :

Quasi-public Corporations -created as agencies of the State for narrow and limited purposes without the powers and liabilities of self-governing corporations.

Municipal Corporations/Local Government -body politic and corporate constituted by the incorporation of the inhabitants for purposes of local government thereof. -established by law partly as an agency of the State to assist in the civil government of the country, but chiefly to regulate and administer the local or internal affairs of the city, town or district which is incorporated. -political subdivision of a nation or state which is constituted by law and has substantial control of local affairs

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Local Government: Dual Personality:

Public or Governmental -it is an agent of the state for the government of the territory and the inhabitants within the local government limits -exercises by delegation a part of the sovereignty of the state Private or Corporate -acts in a similar category as a business corporation, performing functions not strictly governmental or political

-patrimonial powers

-they serve as an instrumentality of the -they act as an agency of the community in the State in carrying out the functions of administration of local affairs. government.

Local Governments: Power and Functions:

i. Sources of Power of Local governments:
1. Constitution 2. R. A. No. 7160 3. All existing laws, acts, decrees. Executive orders, proclamations and administrative orders not inconsistent with the Constitution and R. A. No. 7160.

ii. Classification of local government power:

1. Express power- those granted in express words 2. Implied powers- those necessarily or fairly implied in or incident to the powers expressly granted 3. Inherent powers- those essential to the declared objects and purposes of the corporation not simply convenient but indispensable. 4. Legislative powers- power to make laws 5. Executive powers- power to execute laws. 6. Intramural powers- those exercised within the corporate limits of a municipal corporation 7. Extramural powers- those exercised outside of the corporate limits, like those given for the protection of water supply, prevention of nuisance and also for police forces
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8. Governmental powers- administer the powers of the State and promoting the public welfare within it. Example: Police power, Power of Eminent Domain. Power of Taxation 9. Municipal powers- those for the special benefit and advantage of the community. Example: erection of waterworks, gas works, electric plants, from which profits may be derived by the municipality.

TYPES OF LOCAL GOVERNMENTS:

1.

De jure Municipal Corporations-:those created or recognized by operation of

law

2.

De facto municipal corporations- where the people have organized

themselves, under color of law, into ordinary municipal bodies, and have gone on, year after year, raising taxes, making improvements, and exercising their usual franchises, with their rights dependent quite as much on acquiescence as on the regularity of their origin Elements: a. b. c. d. A valid law authorizing incorporation An attempt in good faith to organize under it A colorable compliance with law An assumption of corporate powers

3.

Municipal Corporation by prescription- exercised their powers from

time immemorial with a charter which is presumed to have been lost or destroyed.

Assignment Completed By:

HIRA MEHWISH Roll No: 36

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