A corporation is an entity that acts singularly from its owners in the sense that it is separate and distinct from its owners. The owners of corporations are called shareholders or stockholders. The shareholders are affected by the organization’s profits or losses resulting from the entity’s operations.
Corporations have to meet the following advantages: Legal existence: A corporation should be to enter into contracts, buy or sell, sue other entities or be sued if need be. Limited liability: There is low or reduced financial risk due to the fact that the entity is separate from its owners. The liability to creditors and other obligors is limited only to the resources of the entity. Continuity of existence: Due to a corporation’s ability
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Common stock has the most voting powers while preferred stock only possesses preferential rights to a share when it comes to the sharing or allocation of earnings and allows its holders or owners first claim, should the corporation face liquidation. Preferred shareholders also receive dividends before any common shareholder. When participating the preferred shareholders can share excess profits with the common shareholders while non-participating preferred stock is limited to only a fixed dividend. If the preferred stock is cumulative its shareholder is given first preference of all dividend payments in arrears before any common shareholder can be paid. Investors prefer a preferred cumulative and participating stock as it has the most return. To record the investment of the shareholders an asset account is debited and a capital account credited.
Earnings per share also known as net income per share is the amount of money generated by each individual share of stock if all the profits were to be allocated to the outstanding shares at the close of the year. It is a part of the company’s profit distributed to each outstanding share of common stock. These earnings per share show the company’s profitability. To calculate EPS we use the
Corporations are legal entities which issue stock to investors who purchase them and become shareholders of the company. The risk taken by investors is that when they buy stocks it is possible that the individual company will not do
“A corporation is an artificial person separate and distinct from its owners.” Briefly explain this statement.
The concept of forming of corporations by registration and restricted liability of stake holders of corporations dates back to mid nineteenth century. The concept in its very basic sense means that a company is a separate legal entity, in other words, it is a juristic person.
VIII. Earnings per Share (EPS) is used by analysts and potential investors to evaluate the profitability of a company.
A corporation is a legal entity designed to shield its owners from liability claims brought against it, as long as they maintain a separation from the entity (Legal-Dictionary.com, 2015). The co-mingling of Drizins’ personal funds into
When you buy stock you are purchasing a part of a corporation. The ownership of the corporation is divided into shares of common
C Corporations are the most common type of corporations. Has limited liability to all of its owners who are stockholders.
The definition of company is 'A legal entity, by legislation, which permits groups of people, as shareholders, to apply to government for an independent organization to be created, which can then pursue set objectives ' (Duhaime, 2014).
Corporate personhood is one of the issue in the United States of America since the mid-19th century. In a corporation, people get together and form a group. Corporation also a forms of artificial persons such as the governments and other political parties who involved in the modern corporation.
The Corporate personhood, a universal legal model, grants corporations genuine rights and responsibilities similar to those of individual citizens. This concept proved useful in American jurisprudence in that it simplified one’s interactions with huge conglomerates. Citing the Fourteenth Amendment of the constitution, the term corporate personhood served to consider corporations similar to individuals. In that vane, corporate entities like individuals could join contracts as a single unit, corporate entities like individuals could be named in civil lawsuits as a single group and corporate entities like individuals could make decisions that would hold the enterprise responsible as a single entity even though the decisions were
Liability – A corporation is a separate legal entity which means all of the liability is responsible to the corporation. Shareholders are very much so somewhat the same as limited partners they can only lose the amount of what they invested into the corporation.
The management of a corporation issues a predetermined amount of stock shares to investors. After these shares are issued, the investor has the right to sell all or part of their shares of stock to outside investors. Management does not become involved in the transfer of the stock. The transfer of stock does not affect the operation or function of the corporation.
The corporation, which is “an organization, especially a business that has a legally separate existence from the people who run it,” was born with the formation of the British East India Company in 1600. At the end of the American Revolution, the people of the thirteen American colonies shared an intense fear of the corporation, due to the imprint left on the country from the actions of the British East India Company. These actions included the exploitation of the colonies’ wealth and the domination of all trade coming into and leaving the ports of each of the thirteen colonies. For the entirety of the following century, the American government placed stringent requirements and tight regulations on corporations that emerged within the United
A Corporation can be defined as a legal creation, however the corporation itself, would only exist on a piece of paper. A corporation will never die a natural death like humans die naturally, and corporations will always outlive the individual who created it. With that said, the corporation itself is never really committed to any employee or committed to any neighbor. However, a corporation can always demand employees, a corporation can always demand taxes that are extremely high, and a corporation can also restrict environmental laws. Corporations hold a great deal of power in today's society.
Corporation origin from the Latin word Corpus which means body. It is formed by a group of people and has separate rights and liability from those individual. In any means, corporation exists independently from its owner and this principle is called the doctrine of separate personality. Doctrine of separate personality is the basic and fundamental principle in a Company Law. This principle outline the legal relationship between company and its members. Company’s assets belong to the company not the shareholders as assets are the equity for creditors. Company must use up all its assets to pay off the creditors if it became insolvent. The same applies to the corporation’s debts. For limited liabilities company, the shareholder liability is limited which means that the shareholder is restricted to the number of shares they paid and not personally liable for the corporation’s debts. If the company does not have enough equity to pay off debts, the creditors cannot come after the shareholders. However, limited liability company can be very powerful when in hands who do fraud and on defeating creditors’ claims. Courts then can ignore the doctrine for exception cases and lifting the corporate veil. Lifting the corporate veil is a situation where courts put aside limited liability and hold a corporation’s shareholders or directors personally liable for the corporation’s debts.