Corporation by prescription

Generally, the consent or grant of the State via a legislative measure is required for the creation of a corporation. Without a general corporation law or a special incorporation law (a charter), corporations cannot exist in the eyes of the law. The exception is corporations by prescription.

If a corporation has exercised its powers for an indefinite period of time (usually since time immemorial) without the State stepping in or interfering along the day, it is considered given the status of a corporation. If a corporation has existed for such a time longer than the memory of man can remember, it is presumed that, long time ago, it was given a charter and it should be deemed a corporation in our legal system. It is called a "corporation by prescription."

Under the common law of England corporations depended for their existence upon a charter (Latin charta, a paper) granted by the king. Corporations which had existed so long a time that "the memory of man ran not to the contrary" were said to exist by prescription; but that considerate doctrine was based upon the theory that the corporation had at one time received a charter, which, in course of time and by reason of the vicissitudes of human affairs, had been lost. When the religious revolution of the sixteenth century occurred, most of the religious houses of England were corporations by prescription, because they were so ancient that their original charters, if there were any, had disappeared. The rights of a corporation by prescription, however, are quite as valid at common law as are the rights of those which can exhibit a charter. Instances of corporations interesting to American people are those created by letters patent from the King of England to the London Company, under which the original settlements of the New England coast were made; and the charter to the Virginia Company, under which the shores of Virginia were first colonized by Englishmen.

SOURCE: Willis, J. (1908). Corporation. In The Catholic Encyclopedia. New York: Robert Appleton Company. Retrieved November 24, 2018 from New Advent:

Despite the above-discussed exception, the general rule remains that the creation of corporations is by operation of law.