Definition and Legal Structure
A corporation is a legal entity that is separate and distinct from its owners. It is formed by filing articles of incorporation with the state in which it is headquartered. Once formed, a corporation can enter into contracts, sue and be sued, and own property. A corporation can also issue stock to raise capital.
The legal structure of a corporation is based on a hierarchy of power. Shareholders own the corporation and elect a board of directors to manage the corporation. The board of directors hires officers to run the day-to-day operations of the corporation. The officers report to the board of directors, who report to the shareholders.
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