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Understanding Corporations: Structure and Benefits Explained

Learn the basics of corporations, from limited liability and stock ownership to the role of shareholders and directors. Discover the advantages of incorporation and the differences between closely held and publicly held corporations.

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Understanding Corporations: Structure and Benefits Explained

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  1. Chapter 8 Section 3 Evalisse Serrano and Jaelly Solano Period 4

  2. -A corporation is a legal entity, being owned by individual stock holders. Each face limited liability for the firms debts -Stockholders own stock which is a certificate of ownership in a corporation. If you own a stock in a corporation, you are part owner of that corporation

  3. -A corporation is defined as an “entity” because it has a legal identity separate from those of its owners. -A corporation pays taxes, may engage in business, make contracts, sue other parties, and get sued by others. -Closely held corporations rarely trade their stock, but pass it on within families. -Public held corporation have many share holders who can buy or sell stock in the open market. -Stocks are bought and sold at financial markets called stock exchanges. Ex: New York stock exchanges.

  4. -Corporation have the same basic structure. A corporation owners – the stock holders- elect a board of directors. -The board of directors makes all the major decisions pf the corporation. -Some advantages of incorporation are limited liability for owners, transferable ownership, ability to attract capital, and long life.

  5. Quiz • What are the benefits of a corporation/ -They pay taxes, may engage in a business, make contracts, file a lawsuit or be sued by others. • What is a corporation? -A legal entity or being owned by an individual stock holder, each of whom faces limits liability for the firms debt. • What is a stock? -A certificate of ownership. • What is a publically held corporation? -A corporation that has many shareholders who can buy and sell stock in the open market. • What does MNC stand for? -MultiNational Corporation.

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