Corporations

A corporation is a separate entity, separate and distinct from its owners, which is

completely different from a sole proprietorship, or general partnership. A corporation can be

created for a limited duration, or the corporation can have perpetual existence. A corporation has

continuity regardless of its owners since it is a separate legal entity. A corporation must be

formed in compliance with corporate law since they have legal existence and constitutional

rights. Corporate law is a state law, and corporations are incorporated by the states; there is no

U.S corporations because there is no such thing as U.S corporation. A lot of corporations

incorporate where their principal place of business is located but not all corporations do. Many

corporations choose to incorporate in the state of Delaware; many of them have no business

presence there, but the Delaware chancery courts have developed a reputation for fairly and

quickly applying a very well-developed body of corporate law in Delaware. The courts of

Delaware also operate without a jury, meaning that disputes that are heard are usually predictable

and transparent.

The first step to start a corporation; the founders must file the articles of incorporation

with the state agency charged with managing business entities. The articles of incorporation is a

legal document that creates a corporation when filed and approved by the relevant state

authority. Articles of incorporation vary from state to state, but they always include a common

set of questions. The founders must first state the name of the company and whether the

company is for-profit or nonprofit. The name must include some form of the words incorporated,

company, corporation, or limited; the name also must be unique and distinctive. The founders

must also state their identify, the company’s purpose, and how long they wish for the company to

exist. The number of shares that the corporation will issue initially, and the par value of those
shares must be included in the articles of incorporation by the founders. The company can issue

more shares in the future or buy back shares from the shareholders.

Corporations can be complicated to manage and require attorneys and accountants to

maintain corporate books in good order. There are filing fees that are due at the time of

incorporation; there are also annual license fees, franchise fees and taxes, attorney fees, and fees

related to maintaining minute books, corporate seals, stock certificates and registries, as well as

out-of-state registration. There are different types of corporations, for example a domestic

corporation. A domestic corporation is a corporation operating in the state in which it was

incorporated; but to do business out of state they must register as a foreign corporation. A

foreign corporation is a corporation incorporated in a state other than where it is seeking to

operate.

Shareholders are what the owners of the corporation is called, and they could have one

shareholder, or they could have as many as millions of shareholders. The shareholders could hold

one share or many more shares. The number of shareholders with a closely held corporation is

usually small compared to a publicly traded corporation where their number of shareholders are

large. With a publicly traded corporation, the laws of supply and demand determines the value of

a share. A shareholder could be an actual person, or a shareholder could be other corporate

entities, such as partnerships or corporations. When one corporation owns all the stock of another

corporation, the owner would be known as a parent company. The corporation that is owned by

the parent company would be known as a wholly owned subsidiary. A lot of times large

companies form subsidiaries for specific purposes; one of them reasons is so that the parent

company can have limited liability or advantageous tax treatment.

 WORKS CITED
Lau, T., & Johnson, L. (2011). 11.3 Corporations. In Legal and ethical environment of
business (pp. 355–364). essay, Flat World Knowledge, Incorporated