How Can a Corporation Bring a Suit?

By Marilyn Lindblad

A corporation is an organization formed under state law to carry on a business. A corporation is, in essence, a legally created pseudo-person that operates a business. The corporation's bylaws grant authority to its officers, directors and shareholders to control its activities. Different corporations may have different procedures for authorizing the corporation to file a lawsuit.

A corporation is an organization formed under state law to carry on a business. A corporation is, in essence, a legally created pseudo-person that operates a business. The corporation's bylaws grant authority to its officers, directors and shareholders to control its activities. Different corporations may have different procedures for authorizing the corporation to file a lawsuit.

Bylaws

The bylaws of a corporation are its written rules of conduct. The bylaws establish who the corporate officers are and what authority each officer has to act on behalf of the corporation. For instance, the bylaws may establish a chief legal officer for the corporation who has authority to file a lawsuit on behalf of the corporation. Alternatively, the bylaws could require that the board of directors vote on and approve a resolution to file suit in the corporation's name. The bylaws could also delegate authority to bring a lawsuit to the corporation's general counsel or another lawyer in the corporate legal department.

Ready to incorporate your business? Get Started Now

Representation

Because a corporation is not a person, it cannot represent itself in state or federal court. Therefore, an attorney representing the corporation must bring a suit on its behalf. Every corporation may have its own process for choosing an attorney to bring a lawsuit. The bylaws may specify a process for choosing an attorney or delegate that authority to a lawyer who works for the corporation.

Disclosure

A corporation that brings a lawsuit as a plaintiff or gets sued as a defendant must identify its owners. This disclosure enables judges, jurors and attorneys representing other parties to determine whether they have conflicts of interest in the case. For instance, if a judge owns stock in a corporation that owns a subsidiary corporation that brings a lawsuit, the corporate disclosure makes the judge aware of the potential conflict so she can disqualify herself from overseeing the case or disclose her interest to the litigants.

Discovery

During litigation, either party may take the deposition of its opponent. Procedural rules permit a defendant to take the deposition of a corporation, even though the corporation is an artificial person. If the defendant does not know the name of individuals within the corporation that he wishes to depose, he can make the corporation designate a witness to testify in place of the corporation. This witness must testify about information that the corporation knows and information that is available to the corporation.

Ready to incorporate your business? Get Started Now
What Liability Does a Corporation Have for Its Officers?

References

Related articles

How to Name C Corp Officers

A C corporation is an organization legally distinct from its owners, otherwise known as shareholders. This legal separation generally protects the shareholders from being personally liable for the business’s liabilities. Oftentimes it also requires that the business’s day-to-day activities be run by corporate officers. The corporate officers are often the face of the business to its employees, customers and suppliers, so choosing the correct people for the job is important. In addition to finding the right fit, it is important to ensure that you comply with all of the required procedures for appointing officers.

What Are the Benefits & Disadvantages of a C Corp?

C corporations are one of the oldest forms of business entity in the country and one of the most common. As a result, some businesses may instinctively form as C corporations without really considering the pros and cons as applied to their business model. It is important to note that C corporations operate under state law. As a result, some issues regarding regulation will vary.

Corporation Law Notes

A corporation is a legal entity that gradually developed into its modern form over hundreds of years. It is designed to encourage investment into potentially profitable projects by limiting the economic liability of its investors. In the United States, corporations are formed and governed by the laws of individual states.

LLCs, Corporations, Patents, Attorney Help

Related articles

Principal Place of Business vs. State of Corporation

A corporation is created by the corporate law of a particular state. It is legally independent of its shareholders and ...

Corporation vs. Officer vs. Owner

A business that operates as a corporation generally drafts bylaws – a document that governs all aspects of the ...

What Determines the Legal Signature for a Corporation?

A corporation is a business created under state law that is a separate legal entity from the individuals who own or run ...

Dissolving a Delaware Corporation Without Shareholder Approval

Delaware corporation law specifies the conditions under which a corporation can be dissolved, which terminates the ...

Browse by category
Ready to Begin? GET STARTED