Basic structures and problems of company law

Companies are organizations with a structure of bodies determined by contract and law, such as board of directors. By creating organs, organisations can coordinate the behaviour of their members. If the behaviour is strongly coordinated, it is said that the organisation has goals, strategies, interests, and a will to act. Organisations are embedded in markets. They buy inputs and sell their products. Commercial corporations can not only acquire or dispose of property, Corporations (or the shares) are property that can be bought and sold. This creates a market for these organisations, focusing them on the principle of profit maximisation. This is because an organization, which is transferable by a sales contract will end up in the hands of the person for whom it is most valuable, i.e., who can make the highest profit from the organization. This chapter deals with the productive properties of organisations as well as the tendency of the strong people within it, to exploit and act opportunistically. The law tries to constrain these corporate governance problems with corporation law and capital market regulation.