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Order Code RS22230
August 25, 2005
CRS Report for Congress
Received through the CRS Web
Congressional or Federal Charters: Overview
and Current Issues
Kevin R. Kosar
Analyst in American National Government
Government and Finance Division
Summary
A congressional or federal charter is a federal statute that establishes a corporation.
Congress has issued charters since 1791, although most charters were issued after the
start of the 20th century. Congress has used charters to create a variety of corporate
entities, such as banks, government-sponsored enterprises, commercial corporations,
venture capital funds, and more. Recently, Congress has faced two issues involving its
use of charters - confusion over who is responsible for the activities of chartered
corporations and the challenges of managing them. This report will be updated if
relevant legislative action occurs.
What Is a Congressional or Federal Charter?
In the Anglo-American linguistic tradition, the word charter has been used to refer
to many legal writs, including articles of agreement, founding legislation, contracts,
articles of incorporation, and more.1 The varied uses of this term to refer to so many
different legal writs may reflect the term's etymology. Charter is derived from the Latin
1 Examples follow. The articles of agreement among nation-states that set forth the objectives
and fundamental structures of the United Nations are referred to as a charter; see Charter of the
United Nations at [http://www.un.org/aboutun/charter/]. A New York Times editorial noted, The
C.I.A. charter, a federal statute, prohibits...; editorial, The Domestic Spying Trap, New York
Times, May 13, 2003, p. A30. A charter is a contract between an organized group and a
state-authorized body...; Jeanne Allen, Chartering Success; The Schools for Students Who
Need It Most, Washington Times, Sept. 16, 2002, p. A21. The resolution calling for the board
to consider changing the way that members are elected .... If the board were to follow
shareholders' recommendation ... shareholders would have to vote to approve a change to the
company's charter; Christine Frey, Costco Shareholders Split on 2 Proposals, Seattle Post-
Intelligencer, Jan. 30, 2004, p. Cl. The U.S. National Archives refers to the U.S. Constitution,
the Declaration of Independence, and the Bill of Rights as the Charters of Freedom; see
[http://www.archives.gov/national-archives-experience/charters/charters.html].
Congressional Research Service 4- The Library of Congress](ViewImageLocal?handle=hein.crs/crsmthabdny0001&div=1&collection=&method=preview&ext=.png&size=3)