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corporation

An "artificial person," created under the laws of a given state. A corporation has an identity and an existence distinct and independent from that of its individual owners. Corporations have the power to (1) act; (2) contract; (3) sue and be sued; and (4) own, manage, and buy/sell property. The profits (and losses) of the corporation are distributed according to the ownership interest (i.e., the percentage of total shares) held by each shareholder. The defining feature of a corporation is its legal independence from the people who create it. This means that if a corporation fails, shareholders only stand to lose their investment in the company (i.e., the amount of money they paid for shares of stock in the company) but will not be liable for any remaining debts owed to the corporation's creditors. Corporations are chartered by all 50 of the United States and by the federal government in certain instances (e.g., national banks and savings and loan institutions).


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