LEGAL ENTITY

A legal entity is a legal construct through which the law allows a group of natural persons to act as if it were a single composite individual for certain purposes. The most common purposes are lawsuits, property ownership, and contracts. Sometimes referred to as corporate personhood or legal personality, this concept allows for easy conduct of business by having ownership, lawsuits, and agreements under the name of the legal entity instead of the several names of the people making up the entity.

A legal entity is not necessarily distinct from the natural persons of which it is composed. Most legal entities are simply amalgamations of the persons that make it up for convenience's sake. A legal entity that does have a separate existence from its members is called a company or corporation. This distinction gives the corporation its unique perpetual succession privilege and is usually also the source of the limited liability of corporate members. Some other legal entities also enjoy limited liability of members, but not on account of separate existence.^[1]

Some examples of legal entities include:

• collectives
• companies
• cooperatives (co-ops)
• corporations
• corporations sole
• estates of deceased persons
• European economic interest groupings (EEIGs)
• flow-through entities (FTEs)
• limited liability companies
• municipalities
• natural persons
• partnerships
• political parties
• political action committees (PACs)
• sovereigns
• states
• temples, in some legal systems, have separate legal personality^[2]
• trade unions
• trusts
• unincorporated associations
• ship or vessel

Some of these examples may overlap in some countries. For example, in many jurisdictions, banks are not separate entities, but merely companies or partnerships which hold the requisite banking license. Similarly, trade unions and political parties are often legally unincorporated associations.

[edit] Limitations

There are limitations to the legal recognition of artificial persons. Legal entities cannot marry, they cannot vote or hold public office, and in most jurisdictions there are certain positions which they cannot occupy.^[3] The extent to which a legal entity can commit a crime varies from country to country. Certain countries prohibit a legal entity from holding human rights; other countries permit artificial persons to enjoy certain protections from the state that are traditionally described as human rights.^[4]

[edit] See also

• Company (law)

[edit] Footnotes

1. ^ For example, Limited Liability Partnerships
2. ^ Williams v The Shipping Corporation of India (US District Court, Eastern District Virginia), 10 March 1980, 63 ILR 363
3. ^ These restrictions vary from country to country. Some countries do not permit a corporate entity to be a director or a liquidator while others do.
4. ^ Most commonly in the area of taxation and in relation to search warrants.