Question

What are the characteristics of corporations?

Answer 1

Some of the characteristics of corporations are:

1. Corporation Has Limited Liability: A corporation grants the owners limited liability against debts and lawsuits filed against the company.

2. Corporation is Owned by Shareholders: When the corporation is formed, a fixed number of company stock shares are issued. Stock shares can be owned by one person or many shareholders

3. Corporation is a separate legal entity: It is a separate entity from its owners who are called stockholders. A corporation is treated as a “person” with most of the rights and obligations of a real person

4. Unlimited life: As a corporation is owned by stockholders and managed by employees, the sale of stock, death of a stockholder, or inability of an employee to function does not impact the continuous life of the corporation

5. Professional management: Investors in a corporation need not actively manage the business, as most corporations hire professional managers to operate the business.