Understanding the Corporation
A Corporation is a legal entity that is created under the laws of a state as a separate legal person that has its own privileges and liabilities distinct from those of its members. This concept of legal personality allows the entity to engage in business, enter into contracts, and own property in its own name. According to the Cornell Law School Legal Information Institute, corporations are typically characterized by limited liability, centralized management, and the easy transferability of ownership interests.
Structure and Governance
The governance of a Corporation is usually divided into three tiers: Shareholders, the Board-of-Directors, and executive officers such as the Chief-Executive-Officer. The Shareholders own the company by purchasing stock, but they do not manage the day-to-day operations. Instead, they elect a Board-of-Directors to oversee the high-level strategy and protect their interests. The board then hires officers to handle the operational aspects of the Business.
Historical Context
Modern corporate law has its roots in the joint-stock companies of the 17th century, such as the Dutch-East-India-Company. These early entities paved the way for the global Capitalism seen today. In the United-States, the legal framework for incorporation is primarily handled at the state level, with many companies choosing to incorporate in Delaware due to its specialized Court-of-Chancery.
For further reading on financial structures, see Investopedia's definition. There are various types of corporations including the C-Corporation, the S-Corporation, and the Non-profit-Organization, each with unique tax implications defined by the Internal-Revenue-Service.