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person) and recognized as suchA corporation is a company or group of people authorized to act
as a single entity (sdadasdasda a person) and recognized as such in law. Early incorporated
entities were established by charter (i.e. by an ad hoc act granted by a monarch or passed by a
parliament or legislature). Most jurisdictions now allow the creation of new corporations through
registration.
Corporations come in many different types but are usually divided by the law of the jurisdiction
where they are chartered into two kinds: by whether or not they can issue stock, or by whether or
not they are for profit.
Where local law distinguishes corporations by ability to issue stock, corporations allowed to do so
are referred to as "stock corporations", ownership of the corporation is through stock, and owners
of stock are referred to as "stockholders." Corporations not allowed to issue stock are referred to
as "non-stock" corporations, those who are considered the owners of the corporation are those
who have obtained membership in the corporation, and are referred to as a "member" of the
corporation.
Corporations chartered in regions where they are distinguished by whether they are allowed to be
for profit or not are referred to as "for profit" and "not-for-profit" corporations, respectively.
There is some overlap between stock/non-stock and for profit/not-for-profit in that not-for-profit
corporations are always non-stock as well. A for profit corporation is almost always a stock
corporation, but some for profit corporations may choose to be non-stock. To simplify the
explanation, whenever "stockholder" is used in the rest of this article to refer to a stock
corporation, it is presumed to mean the same as "member" for a non-profit corporation or for
profit, non-stock corporation.
Registered corporations have legal personality and are owned by shareholders[1][2] whose liability
is limited to their investment. Shareholders do not typically actively manage a corporation;
shareholders instead elect or appoint a board of directors to control the corporation in
a fiduciary capacity.
In American English the word corporation is most often used to describe large business
corporations.[3] In British English and in the Commonwealth countries, the term company is more
widely used to describe the same sort of entity while the word corporationencompasses all
incorporated entities. In American English, the word company can include entities such
as partnerships that would not be referred to as companies in British English as they are not
a separate legal entity.
Despite not being human beings, corporations, as far as the law is concerned, are legal persons,
and have many of the same rights and responsibilities as natural persons do. Corporations can
exercise human rights against real individuals and the state,[4][5]and they can themselves be
responsible for human rights violations.[6] Corporations can be "dissolved" either by statutory
operation, order of court, or voluntary action on the part of shareholders. Insolvency may result in
a form of corporate failure, when creditors force the liquidation and dissolution of the corporation
under court order,[7] but it most often results in a restructuring of corporate holdings. Corporations
can even be convicted of criminal offenses, such as fraud and manslaughter. However
corporations are not considered living entities in the way that humans are. [8]
in law. Early incorporated entities were established by charter (i.e. by an ad hoc act granted by a
monarch or passed by a parliament or legislature). Most jurisdictions now allow the creation of
new corporations through registration.
Corporations come in many different types but are usually divided by the law of the jurisdiction
where they are chartered into two kinds: by whether or not they can issue stock, or by whether or
not they are for profit.
Where local law distinguishes corporations by ability to issue stock, corporations allowed to do so
are referred to as "stock corporations", ownership of the corporation is through stock, and owners
of stock are referred to as "stockholders." Corporations not allowed to issue stock are referred to
as "non-stock" corporations, those who are considered the owners of the corporation are those
who have obtained membership in the corporation, and are referred to as a "member" of the
corporation.
Corporations chartered in regions where they are distinguished by whether they are allowed to be
for profit or not are referred to as "for profit" and "not-for-profit" corporations, respectively.
There is some overlap between stock/non-stock and for profit/not-for-profit in that not-for-profit
corporations are always non-stock as well. A for profit corporation is almost always a stock
corporation, but some for profit corporations may choose to be non-stock. To simplify the
explanation, whenever "stockholder" is used in the rest of this article to refer to a stock
corporation, it is presumed to mean the same as "member" for a non-profit corporation or for
profit, non-stock corporation.
Registered corporations have legal personality and are owned by shareholders[1][2] whose liability
is limited to their investment. Shareholders do not typically actively manage a corporation;
shareholders instead elect or appoint a board of directors to control the corporation in
a fiduciary capacity.
In American English the word corporation is most often used to describe large business
corporations.[3] In British English and in the Commonwealth countries, the term company is more
widely used to describe the same sort of entity while the word corporationencompasses all
incorporated entities. In American English, the word company can include entities such
as partnerships that would not be referred to as companies in British English as they are not
a separate legal entity.
Despite not being human beings, corporations, as far as the law is concerned, are legal persons,
and have many of the same rights and responsibilities as natural persons do. Corporations can
exercise human rights against real individuals and the state,[4][5]and they can themselves be
responsible for human rights violations.[6] Corporations can be "dissolved" either by statutory
operation, order of court, or voluntary action on the part of shareholders. Insolvency may result in
a form of corporate failure, when creditors force the liquidation and dissolution of the corporation
under court order,[7] but it most often results in a restructuring of corporate holdings. Corporations
can even be convicted of criminal offenses, such as fraud and manslaughter. However
corporations are not considered living entities in the way that humans are. [8]
the owners of a limited company. They buy shares which represent part ownership of
a company.
A shareholder or stockholder is an individual or institution (including a corporation) that legally
owns a share of stock in a public or private corporation. Shareholders are the owners of a limited
company. They buy shares which represent part ownership of a company.
Stockholders are granted special privileges depending on the class of stock. These rights may
include:
The right to nominate directors (although this is very difficult in practice because of minority
protections) and propose shareholder resolutions.
selecting, appointing, supporting and reviewing the performance of the chief executive;
The legal responsibilities of boards and board members vary with the nature of the organization, and
with the jurisdiction within which it operates. For companies with publicly trading stock, these
responsibilities are typically much more rigorous and complex than for those of other types.
Corporation
Corporation is a type of business which is formally registered as a public owned company it is
recognized as a sperate entity from its owners.
The three main disadvantages of sole proprietorships and partnerships are:
Advantages
The liability of the owners towards the creditors is limited to their investment in the
company. This means that in case of liquidation of the company, if the company's assets are
insufficient to meet the liability, nothing is required to be contributed by the owners. Only the
owners' contribution is at stake rather than their personal assets.
2.
The corporation is considered a legal person with perpetual existence. It exists until it is
liquidated and death or change in ownership has no effect on the corporation.
3.
4.
The ownership is represented by the number of share certificates held by a person, and this
makes the transfer of ownership very easy.
Disadvantages
Following are the disadvantages of a coporation:
1.
Establishing a corporation is a complex process and requires registration with the central
regulatory authority and listing on a stock exchange which required fulfillment of certain
requirements related to the amount of capital, number of directors, etc.
2.
Normally the corporations have a large number of shareholders; they delegate the
governance function to a body of persons called board of directors. The board of directors
hires management to look after the day to day affairs of the corporation. The management is
an agent and the owners are principal. It is quite possible that the management may act to
further their own interests rather than the interest of the owners of the corporation. When this
happens it is called an agency problem.
3.
In case of corporations there is double taxation. First of all the corporate income is taxed at
a flat rate and then the dividends paid to the shareholders is taxed.