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A corporation refers to a legal entity that is separate and different from its owners. Under the law, corporations own many of the rights and responsibilities of an individual. They can arrive for contracts, loan and borrow money, sue and be sued, hire employees, own assets, and pay taxes.

The detailed legal definition of a corporation differs from jurisdiction to jurisdiction, but the Corporation’s most crucial characteristic is always a limited liability. It means that shareholders may participate in the profits through dividends and stock appreciation but are not personally liable for the company’s debts.

A corporation is formed when it is incorporated by a group of shareholders who share the same ownership, represented by their holding of stock shares and pursue a common goal.

How Is a Corporation Created?

How Is a Corporation Created?The facts vary from country to country to state. To create a corporation in U.S., it is necessary to file articles of incorporation with the state where it will be registered. Generally, incorporation is immediately followed by the issuance of stock to the Corporation’s shareholders. After this point, the shareholders will elect a board of directors in an annual meeting.

Non-Profit Corporation

Non-Profit CorporationA corporation can be created by single or multiple shareholders who come together to chase a common goal. A corporate can be made as a for-profit or a not-for-profit entity.

They are commonly used by charitable, educational, and religious organizations to operate without generating profits. Any contributions, donations, or revenue received are retained in the entity to spend on operations, expansion, or plans. A non-profit is exempt from taxation.

How Do Corporations Work?

A corporation is mandatory to name a board of directors before it can commence operations, and shareholders elect the members of the board of directors during the annual general meeting.

Each shareholder is enabled to one vote per share and is not required to take part in the day-to-day running of the Corporation. However, the shareholders are entitled to be elected as members of the board of directors or executive officers of the Corporation.

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