De jure corporations are legally incorporated businesses, while de facto corporations do not meet legal requirements. Doing business with a de facto corporation is riskier, so companies verify de jure status. Governments have concise processes for granting charters to de jure corporations, and revocation is possible if laws are not followed.
De jure corporations are simply businesses that have been fully and legally incorporated in accordance with the provisions and requirements of a particular government. For the most part, the assumption is that a company currently engaged in a commercial enterprise is actually a de jure company. However, that’s not always the case.
Unlike a de jure company, there is also a de facto company designation. Companies of this type do not currently meet the legal requirements of the government involved. Doing business with a de facto company carries a higher degree of risk, as it is more difficult to go through the legal system to seek compensation should a business transaction go awry. For this reason, most companies that enter into contractual arrangements with other companies tend to verify at some point that the company in question is in fact a de jure company.
While the process of registering and complying with various standards is slightly different from one country to another, most have a concise process for companies to get the correct card. In the United States, a company will identify the elements necessary to obtain a charter from one of the fifty states that are part of the Union. Once the company has provided documentation that the agency has complied with all requirements under that status, a formal application is submitted for assessment. If all is in order, the state grants charter and the company can legally do business anywhere in the United States.
The term de jure is translated as “a matter of law”. Thus, when a company is granted de jure corporate status, the government acknowledges that the business has been properly ordered to meet the minimum requirements stipulated by law at the time the charter was granted. The granting of the card also implies that the government anticipates that the de jure company will continue to remain in good standing even after obtaining the card. Although relatively rare, it is possible for an issuing body to revoke the charter if there is concrete evidence that a company is not complying with applicable laws and regulations.
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