THE CORPORATION

Ch.4 THE CORPORATION

Corporation is the association of individuals united for some common purpose, and permitted by law to use a common name, and to change its members without dissolution of the association. It is a relative small percentage (14%), and 200 top corporations were responsible for over 60% of all the business transacted in the early 1970’s and generated about 86% of total revenues produced in that same period.

Types of corporations (according the sponsorship: public or private; ownership: close or open; or location: domestic, foreign, or alien).

Public or Private:
A public corporation is organized by federal, state, or city government for the purpose of conducting public business (roads, school system, FDIC). Public corporations established to furnish products and service that could not be provided by private institutions.

Close or Open:

In the close corporation (family corporation), the stock is usually owned by a few individuals active in the management of the firm. No shares are offered for sale to outsiders, but when additional capital is required, the close corporation might decide to sell shares of its ownership, thereby creating an open corporation.

Profit or Nonprofit:

A profit corporation makes a profit for its shareholders. Nonprofit corporations have an educational, religious and etc. purposes.

Domestic, Foreign, or Alien:

A business chartered under the laws of one state and doing business in that state is known as a domestic corporation. In every other states that it does business but is not chartered, it is considered a foreign corporation. A firm doing business in the US but chartered by a foreign government is known in this country as an alien corporation.

Stockholders are known as the owners of a corporation. Meeting, voting, mergers (слияние компании), consolidation, and dissolution. One vote for each share (statutory voting). An absentee ballot known as a proxy. A quorum of meeting is 50% voting stockholders. Cumulative voting allows a minority group of stockholders to elect some members on the board of directors. The small group can elect at least one individual to the board.
Alien Corporation –Domestic Corporation – Foreign corporation
Annual report
Board of directors
Close corporation
Cumulative voting
Incorporation
Incorporators – who unite to begin the corporation and whose main characters is limited liability
Limited liability – the limit of stockholder’s liability to the extent of his or her investment. Creditors cannot look beyond the assets of the corporations for settlement, because the corporation is a separate entity and the firm, rather than its owners, owes the debt.
Open corporation
Private corporation – one that is owned and operated by stockholders for a profit.
Proxy –an absentee ballot delegating authority to vote to a third person (in place of the stockholder) for a specific meeting
Public corporation
Stock certificate –written evidence of ownership of one of more shares of stock in a corporation
Subchapter S corporation – a corporation that may be taxed as a partnership if it has no more than 15 stockholders that hold one class of stock (common) and has a domestic status.