Characteristics of a Corporation definitions Flashcards
Characteristics of a Corporation definitions
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Corporation A separate legal entity from its owners, capable of owning assets, incurring liabilities, and existing independently of its shareholders. Limited Liability Protection for owners, restricting their financial loss to the amount invested and shielding personal assets from corporate debts. Unlimited Life Characteristic allowing continued existence regardless of changes in ownership or the death of shareholders. Transferability of Ownership Ability for shares to be easily bought or sold without affecting the corporation’s operations or existence. Double Taxation Situation where corporate earnings are taxed at both the corporate level and again when distributed as dividends to shareholders. Government Regulation Legal oversight and rules imposed by authorities, often resulting in increased compliance requirements for corporations. Separation of Ownership and Management Structure where shareholders own the company but delegate daily operations to professional managers. State of Incorporation Jurisdiction whose laws govern a corporation, often chosen for favorable legal or tax environments. Bylaws Internal rules and procedures adopted by a corporation to guide governance and resolve disputes. Stockholder Individual or entity owning shares, granting rights such as voting, dividends, and participation in major decisions. Board of Directors Elected group responsible for overseeing corporate policies, major decisions, and appointing executive management. Chief Executive Officer Top executive responsible for implementing board policies and managing overall corporate operations. Dividend Distribution of a portion of corporate earnings to shareholders, typically in cash or additional shares. Preemptive Right Privilege allowing existing shareholders to maintain their ownership percentage by purchasing new shares before public offering. Liquidation Process of dissolving a corporation, settling debts, and distributing remaining assets to shareholders.
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