Corporate

Corporate Entity

Type	Business
Area served	Global

A corporate entity, often simply referred to as a corporation, is a legal entity created by individuals, stockholders, or shareholders, with the purpose of operating for profit. Corporations are allowed to enter into contracts, sue and be sued, own assets, remit federal and state taxes, and borrow money from financial institutions.

Overview

The concept of a corporation is a broad one. A corporation can be organized for various purposes, including manufacturing, transport, and services. Corporations are typically characterized by having limited liability, meaning that its shareholders are legally protected from the debts of the corporation beyond the amount of their investment.

History

The history of corporations dates back to ancient times, but the modern corporation as we know it began to take shape in the 16th and 17th centuries in Europe. The East India Company, formed in 1600, is often considered one of the first true corporations.

Types of Corporations

There are several types of corporations, each with unique attributes and legal structures:

• Public Corporation: Traded publicly on stock exchanges, such as the New York Stock Exchange or the NASDAQ.
• Private Corporation: Ownership is private and not traded publicly.
• Non-profit Corporation: Organized for public or social benefit, rather than profit.
• Multinational Corporation: Operates in multiple countries, often with a centralized head office managing global operations.

Corporate Governance

Corporate governance involves the mechanisms, processes, and relations by which corporations are controlled and directed. Governance structures identify the distribution of rights and responsibilities among different participants in the corporation and include the rules and procedures for making decisions in corporate affairs.

Regulation

Corporations are regulated by the laws of the state or country in which they are established. In the United States, for example, corporations are required to register with the state in which they wish to incorporate. Different states have different benefits and legal protections, which may influence the choice of state for incorporation.

Challenges and Criticisms

Corporations face various challenges such as maintaining corporate ethics, managing growth, and dealing with legal and tax issues. Criticisms of corporations include perceptions of environmental degradation, excessive political influence, tax avoidance, and the widening gap between rich and poor.

See Also

• Business ethics
• Corporate tax
• Shareholder