Corporation - What is a corporation?

Definition: A corporation is a body of persons authorized by law to act as one person, and having rights and liabilities distinct from the individuals who are forming the corporation.

Corporations are legal entities that have been created by the Royal Charter, state or common law. These entities are established as separate legal bodies from their members - having their own distinct privileges and liabilities.

Corporations can be found in many forms, but most are used to conduct business. The most important type of corporation is the registered company statute, or common law. Corporations also pay corporation tax in the UK.

Features of corporations

Usually there are four core characteristics that define a business corporation:

Transferable shares Centralized management under a board structure Limited liability Legal personality

Limited liability

One critical feature of contemporary corporations is their limited liability. This means that in the case of the corporation failing, stockholders stand only to lose their investment and employees stand only to lose their jobs – as opposed to also being further liable for debts that are still owed to the corporation's creditors.

Legal personality

By law, corporations are recognized to have rights and responsibilities like natural persons ("people"). This means that corporations can exercise human rights against real individuals and the state, and they can themselves be responsible for human rights violations. They can even be found guilty of criminal offenses, such as fraud and manslaughter.

Theoretically, corporations are conceptually immortal. However, in the case of a corporation being dissolved, they can can even "die”.

Corporations and E-conomic

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Learn about the opportunities available for Corporations and Franchisors with E-conomic.