Legal Person

an organization (association of persons, enterprise, or institution) that has civil rights and obligations. The legal person is a social (collective) creation acting as an independent entity in civil legal relations. On the basis of a charter the legal person acts in its own name in civil legal relations and has independent property liability for its debts.

In the USSR the rights of a legal person belong to organizations that possess individual property, that may acquire property and personal nonproperty rights in their own name, that have obligations, and that may be plaintiffs or defendants in a court, arbitrazh (state arbitration tribunal), or arbitration board. Legal persons are state enterprises and other state organizations operating on a profit and loss basis and having fixed assets, working capital, and independent balances; institutions and other state organizations operating under the state budget and keeping independent accounts if their directors have the right to dispose of funds; state organizations financed from other sources and having independent budgets and balances, for example, the post office and telegraph; and kolkhozes, interkolkhoz organizations, and other cooperative and social organizations (and associations thereot), as well as, in cases specified by law, enterprises and institutions of such organizations and associations with separate property and independent balances.

State organizations that are legal persons are allocated state property which they possess, use, and dispose of with the right of operational management. In the same manner interkolkhoz organizations, kolkhoz enterprises and institutions, and other cooperative and social organizations possess, use, and dispose of the property allocated to them as legal persons. The property of these legal persons is owned by the kolkhozes and cooperative and social organizations that have formed them.

Legal persons are created in the manner prescribed by Union and republic legislation; and some social organizations are formed in the manner specified by their charter, for example, trade unions are created according to the Charter of Trade Unions of the USSR. State organizations are formed by the administrative decrees of competent state agencies. Social organizations (voluntary societies and some cooperative organizations) are formed on the initiative of their sponsers, including citizens or other legal persons, but they must be authorized by a competent state agency or an authorized higher agency of the cooperative system or social organization. Kolkhozes arise without licensing, that is, when a group of persons join together to form a kolkhoz and then register their charter with the executive committee of the regional soviet of working people’s deputies. Interkolkhoz, state-kolkhoz, and other state-cooperative organizations arise as the result of an agreement on joint economic activity concluded by the organizations involved.

Every legal person has its own name. The legal capacity of a legal person, known as special franchise, is determined by the goals of its activities. This capacity begins upon ratification of its charter or by-laws. If its charter must be registered, its legal capacity commences at the time of registration. A legal person acquires civil rights and obligations through its agencies, whose competence is defined in the charter. The state is not liable for the debts of state organizations that are legal persons, and such organizations are not liable for the debts of the state. A state organization is also not liable for the debts of an enterprise subordinate to it that is an independent legal person. Relations between cooperative or social organizations and enterprises which they have established that are legal persons are based on the same principles. A legal person’s liability for its debts extends to all property belonging or allocated to it that is subject to execution under legislation.

A legal person is terminated by liquidation of all its activity and property. In such a case, after all valid claims of creditors have been satisfied, the property that remains is used for the purposes indicated in the charter or transferred to appropriate agencies in the manner prescribed by the charter or law. A legal person may also be terminated by reorganization—the merger of two or more legal persons, the division of one legal person into two or more, or the unification of one or several legal persons with another legal person.

The Soviet state (the USSR or a Union republic) may also act as the subject of civil legal relations, for example, the state has the right to inherit property both according to law and under a will. Trade delegations of the USSR in foreign countries have the rights of a legal person.

The significance of the institution of the legal person increased considerably with the economic reforms carried out in the USSR and other socialist countries during the 1960’s and 1970’s, which resulted in a significant expansion of the rights of socialist state enterprises.

In capitalist countries the institution of the legal person is used as a legal means of centralizing and concentrating capital and organizing the economic activity of capitalist enterprises. There are various types of corporations (associátions of persons) that act as legal persons recognized by law—companies operating for profit. The most common type of legal person is the joint-stock corporation. Various charitable, social-cultural, and other institutions that do not operate for profit are also established in the form of legal persons.

In many countries since the 1940’s trade unions and certain other social organizations have been recognized by law as legal persons as a result of the prolonged struggle of the working class, all working people, and democratic circles. Thus these organizations have been better able to resolve the problems facing them in their struggle against capitalist exploitation, and the material basis for defending the democratic rights and freedoms won by the working people has been created.

S. N. BRATUS’