What is a a corporation?

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A corporation is a legal entity registered with the State in which it is formed. A corporation is owned by stockholders - the people who buy shares of stock issued by the corporation. The stock of a public corporation can be purchased by anyone through the stock exchange where the corporation is listed. A private corporation only issues stock to select individuals or entities, in some cases, only one person owns all the stock.

A corporation will be required to have "By-laws" registered with the State which explain the purpose of the corporation and how it will be governed. There must be officers (President, Vice President, Secretary and Treasurer) even though one person might fill all of those roles in a small private corporation. There may be a Board of Directors who appoint these officers and in a public corporation, the stockholders vote on the members of the Board of Directors. Voting rights of the stockholders (in both public and private corporations) are spelled out in the By-laws.

A corporation protects the stockholders so they are not held personally responsible for liabilities of the corporation (debts, lawsuits, etc.). The corporation itself is held responsible for obeying laws, paying taxes, signing contracts, etc.

First answer by BigMrSteve. Last edit by BigMrSteve. Contributor trust: 318 [recommend contributor]. Question popularity: 1 [recommend question]

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