After reading this chapter, you will be able to answer the following questions: What are the characteristics of corporations? What are the powers granted to corporations by the states? How are corporations classified? How are corporations formed? What are some potential problems with the formation of corporations? How do corporations get funding? | Chapter 38 Corporations: Formation and Financing Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Chapter 38: Corporations: Formation and Financing 38- Characteristics of Corporations Legal entity Rights as person and citizen Creature of state Limited liability of shareholders Unrestricted transferability of corporate shares Perpetual existence Centralized management Corporate taxation A corporation is a legal entity with rights as a person and as a citizen. It is a “creature of the state,” with limited liability of shareholders, and unrestricted transferability of corporate shares. A corporation has perpetual existence, centralized management, and is subject to corporate taxation. 38- Corporate Powers Corporations have both “express” and “implied” powers Express Powers: Perpetual existence; right to litigate; right to make contracts; right to borrow/loan money; right to make charitable donations; ability to establish rules for managing corporation Implied Powers: Whatever actions necessary (within the law) to execute express powers Corporations have both “express” and “implied” powers. Express corporate powers include perpetual existence, the right to litigate, the right to make contracts, the right to borrow or loan money, the right to make charitable donations, and the ability to establish rules for managing the corporation. Implied powers include whatever actions are necessary, within the law, to execute express powers. 38- Classifications of Corporations Public/Private For-Profit/Non-Profit Domestic/Foreign/Alien Publicly Held/Closely Held S-Corporation Professional Corporation Corporations can be classified as public or private, for-profit or not-for-profit, domestic, foreign, or alien, or publicly-held or closely-held. Special types of corporations include the S-Corporation and the professional corporation. 38- Public Versus | Chapter 38 Corporations: Formation and Financing Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Chapter 38: Corporations: Formation and Financing 38- Characteristics of Corporations Legal entity Rights as person and citizen Creature of state Limited liability of shareholders Unrestricted transferability of corporate shares Perpetual existence Centralized management Corporate taxation A corporation is a legal entity with rights as a person and as a citizen. It is a “creature of the state,” with limited liability of shareholders, and unrestricted transferability of corporate shares. A corporation has perpetual existence, centralized management, and is subject to corporate taxation. 38- Corporate Powers Corporations have both “express” and “implied” powers Express Powers: Perpetual existence; right to litigate; right to make contracts; right to borrow/loan money; .
