Question

In more than 100 words, describe the nature and characteristics of corporations.

Answer 1

Answer:- Meaning- A  Corporation is a business entity that is retained by its Shareholders. The basic corporate formation consists of the shareholders, board of directors, and officers. In other words, Corporations are their own legal entity which the owners control over the shares they have in the company.

Nature of Corporations are- The following are the nature of corporations are:

1. It has free transferability of corporate shares- Corporate shares are easily transferable except there is an agreement to the contrary.

2. It has perpetual existence- Where the articles of incorporation do not enumerate a limited period, corporations have a perpetual existence.

3. It has a centralized management- Under it, the shareholders elect a board of directors to manage the business of the corporations.

4. It is treated as a person- A corporation is treated as a person with most of the rights and constraints of a real person.

5. It is treated as a citizen- A corporation is treated as a citizen for some purpose but for not all purposes.

6. Creature of the state- A corporation may be formed only by substantial comformity with a state incorporation law.

7. Legal entity- A corporation is an entity aside from its shareholders, with fully definite rights and liabilities.

Characteristics of Corporations are- There are five main charateristics of a corporation. These are:\

1. Corporation has limitaed liability- A corporation handouts the owners limited liability against arrears and lawsuits filed against the company. This means that any advance, credit cards, mortgages, or reeling credit with dealers, are the sole responsibility of the company.

2. Corporation is owned by shareholders- It is owned by shareholders. When the corporation is establish, a fixed number of company stock shares are published. stock shares can be retained by one person or many shareholders.

3. Corporation consider double taxation- For a small corporation, double taxation is an important consideration. The corporation is taxed on acquiring at the business level.

4. Corporation have their own lifespan- It has a lifespan that only completes when the board of directors and owners vote to diffuse the business. This means a corporation continues beyond the lifespan of its human owners.

5. Corporation have professional management- The owners of the corporation may be able to vote on decisions for the board of directors to make final directives on, but shareholders are not necessarily the managers of the company.

So, these are the following nature and characteristics of corporations.