Charter

charter, a document granting certain specified rights, powers, privileges, or functions from the sovereign power of a state to an individual, corporation, city, or other unit of local organization. The most famous charter, Magna Carta (“Great Charter”), was a compact between the English king John and his barons specifying the king’s grant of certain liberties to the English people. Elsewhere in medieval Europe, monarchs typically issued charters to towns, cities, guilds, merchant associations, universities, and religious institutions; such charters guaranteed certain privileges and immunities for those organizations while also sometimes specifying arrangements for the conduct of their internal affairs.

By the end of the European Middle Ages, monarchs granted charters that guaranteed overseas trading companies monopolies of trade (and in some cases government) within a specified foreign geographic area. A corporation that was so endowed was called a chartered company (q.v.). Virtually all the British colonies in North America were established by charters; these charters granted land and certain governing rights to the colonists while retaining certain powers for the British crown.

Modern charters are of two kinds, corporate and municipal. A corporate charter is a grant made by a governmental body giving a group of individuals the power to form a corporation, or limited-liability company. A municipal charter is a law passed by a government allowing the people of a specific locality to organize themselves into a municipal corporation—i.e., a city. Such a charter in effect delegates powers to the people for the purpose of local self-government.