What Is Corporation


A corporation is a legal entity defined bylaws that limit liability, authority, and privileges among the members. A corporation may be registered either as an individual sole proprietorship or as a partnership, corporation, or limited liability company. Under the law, a corporation may carry on many of the same business activities that would be allowed to individual partners. It does, however, have its own standing and authority in the eyes of the court system and the powers that are. A corporation can also be subjected to legal actions brought against it.

How can one best define a corporation? In theory, a corporation can be any business entity legally established under the law. A business itself is subject to corporation regulations. A corporation may be created for the benefit of all stakeholders, such as owners, stockholders, and creditors. Other types of corporations are those organized as limited liability partnerships (LLCs) or limited liability companies (LLCs).

What is a state-sanctioned, publicly-recognized corporation? All 50 states in the U.S. recognize some form of corporation law. The only states that do not presently recognize the concept of a corporation are Arkansas and Nevada.

What is the status of a corporation? A corporation’s status is determined by each state. The status of a corporation varies according to each state’s laws. To understand a corporation’s status in a particular state, you will need to consult your state corporation commission.

What is a status certificate? The status certificate is a document issued by your state’s corporate commission that certifies that your company is legally permitted to conduct business. Status certificates are also referred to as “notice of claim.” The status certificate serves as proof that your corporation has been legally established.

What is Stock Options? A corporation’s stock options are the right and power to buy or sell a specific number of shares of a corporation’s stock. A shareholder can exercise this option either before or after the expiry of a company’s share class. Once a shareholder exercises his or her option, he or she becomes entitled to an immediate amount of cash. However, it is important to note that if a corporation issues shares to non-listed or new shareholders, he or she loses the right to sell the stocks.

What is a members’ voluntary agreement? A members’ voluntary agreement (which is sometimes referred to as an ‘asset trust’) is an agreement between a corporation and its members. The purpose of an asset trust is for a member to provide money to a corporation in exchange for the right to receive dividends from the corporation. If the dividend rate on the investment is less than what the corporation receives from its stock market activity, the corporation receives the difference – up to a specified amount. In order to be valid, an asset trust must meet the following conditions: it must be registered under the laws of the particular state in which it is executed; it must be established by a majority of the members signing the instrument creating it; it must be reasonably calculated to effect no financial loss to the members.

What is a Public Offering? An ‘offering’ is a method by which the corporation issues shares of stock to the public in exchange for an amount of money called the ‘premium.’ The selling price is the amount that the buyers pay plus any profit made on the sale. The proceeds from the offering are given to the corporation. These proceeds are considered part of the corporation’s assets. Corporations may also use certain ‘routes to raise the funds they need;’ however not all routes are open to all shareholders.