Why is the City of London governed by a corporation?

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The municipal governing body of the City of London is the City of London Corporation. Is there any special meaning to the term "corporation" in its name? (As opposed to simply a historical name, a remnant of the Middle Ages).

In other words, what does it have specifically in common with corporations in the sense of companies or commercial entities with limited liability?

Otavio Macedo

Posted 2018-11-11T09:57:31.313

Reputation: 233

Related (though it doesn't answer the question): https://en.wikipedia.org/wiki/City_of_London_Corporation

– Steve Melnikoff – 2018-11-11T16:37:59.100

2Note that "municipal corporation" is a standard term for a local govenment in American English. – James K – 2018-11-11T17:52:55.903

Answers

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Why questions are tricky, but here goes: Treatment of a municipality as a corporation seems a result of the incremental reform in government.

The City of London is historically important in that the Magna Carta of 1225 granted it special recognition, in English (translated from the original Latin):

The City of London shall enjoy all its ancient liberties and free customs, both by land and by water. We also will and grant that all other cities, boroughs, towns, and ports shall enjoy all their liberties and free customs.

That's great, but in a society of feudalism and monarchy, what legal entity is this talking about? Some nobleman, a bishop? No, it seems significant that by this time the Lord Mayor of London was elected and associated with a livery company. Livery companies evolved from guilds into corporations under royal charter which established personhood on entities that were not natural persons.

To this day, livery companies and liverymen play a significant part in the governance of the City of London. To some the situation seems even more odd when you consider that only liverymen can vote to elect the Lord Mayor of London, but it is well worth noting that the Lord Mayor is a separate and distinct office from the Mayor of London. Lord Mayor is more a ceremonial role; not too surprising in a country that distinguishes between the head-of-state and head-of-government.

As to limitation of liability, sure that's part of it. The idea of corporate liability limits the vicarious liability of any people associated with a corporation. But a corporation doesn't necessarily have stockholders who are escaping liability yet entitlement to profits by creating a "stock corporation". That's the form of corporation most people think of today, but it is a substantially newer development than London.

In the US, we draw a distinction between incorporated areas and unincorporated areas. For example, I once lived in the unincorporated area of Silver Spring, Maryland, which while having tall buildings and a population large enough to be considered a city has no local government aside from the county it is located in.

Finally, it's important to draw a distinction between an incorporated area and a company town, where practically all stores and housing are owned by the one company.

Burt_Harris

Posted 2018-11-11T09:57:31.313

Reputation: 6 445

1Given that it's at the root of the name, it might be worth explicitly listing the benefits of legal personhood, and thus of incorporation. – origimbo – 2018-11-11T19:46:35.643

Personally I'm not a big fan of treating corporations as people; I might not be a good spokesman. But it's a fact of life at least where I live. – Burt_Harris – 2018-11-11T19:58:08.850

It certainly has its problems, but there are obvious difficulties if a public office dies with the incumbent https://en.wikipedia.org/wiki/Corporation_sole#Examples_of_corporations_sole_in_the_United_Kingdom

– origimbo – 2018-11-11T20:02:42.157

The very lack of a body makes a corporation a fiction. You can't give a corporation a rap on the knuckles or a swat on the rear when young to influence its behavior when mature, nor can you throw one in jail. – Burt_Harris – 2018-11-11T20:15:02.750

4Legal personhood does not mean that corporations have the same rights that natural persons(people), only that you can setup an entity that has some rights (like entering a contract) and obligations. For example, without legal personhood you could not be hired by a company, but only by a person, and if that person died then your job contract would end. – SJuan76 – 2018-11-11T23:11:31.067

@Burt_Harris I think there is a valid necessity to protect investors that only invested money in a legal scheme to make money (providing a legal product or service). So the answer should be to make the actual persons that chose criminal activity, or by negligence allowed it, to be personally liable, and never allowed to use corporate funds to defend themselves. Likewise make any profits earned by the corporation (even if already in investor hands) subject to recall and seizure under statutes of limitation, to make whole or mitigate harms caused by illegal activity. People break laws. – Amadeus – 2018-11-12T12:11:16.147

All valid points folks, I just think legal fictions can go too far, but the details of that are far outside the scope of this question. . – Burt_Harris – 2018-11-12T17:03:10.400

I think it is important to distinguish between formal legal entities such as LLC and PLC with shareholders and other forms of business such as single person companies without separate legal entity (and liability). This does not mean that employment ends with the death of the owner as the estate still exists and it can include the employment contract. – Paul de Vrieze – 2018-11-19T18:36:12.380

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To expand on Burt_Harris' excellent answer, the meaning of "Corporation" here is a legally generic, rather than special one.

  1. a. Law. A body corporate legally authorized to act as a single individual; an artificial person created by royal charter, prescription, or act of the legislature, and having authority to preserve certain rights in perpetual succession.

    A corporation may be either aggregate, comprising many individuals, as the mayor and burgesses of a town, etc., or sole, consisting of only one person and his successors, as a king, bishop, or parson of a parish. According to their nature, corporations are termed civil, ecclesiastical (U.S. religious), eleemosynary, municipal, etc.

Oxford English Dictionary

The concept of the legal person and of incorporation developed out of the need to apply existing common law based on personal representation in front of the court of one's Lord to the situation where multiple unrelated people were working to a common aim. A corporation could own property in perpetuity, have debts and make agreements, without the need for trustees, or deal with the awkwardness of inheritance or succession.

origimbo

Posted 2018-11-11T09:57:31.313

Reputation: 19 167

Thanks. In my mind the perpetual nature is the final nail in the coffin of treating corporations as persons: Obviously people aren't immortal, but corporations can be. ;-) – Burt_Harris – 2018-11-12T01:31:56.190

For cities however, some open-ended existence seems warranted. You really don't want a government to fall apart on schedule. Originally this was represented in the distinction between royal charters and grants. – Burt_Harris – 2018-11-12T01:41:01.500

origimbo, feel free to edit my posts any time. – Burt_Harris – 2018-11-12T02:09:00.667