Nature & Structure of Corporations

Question 1

Distinction rule for corps

Answer 1

Corporations are distinct legal entity from its owners (the shareholders)

Question 2

Four key characteristics of corps

Answer 2

Perpetual or continuous existence;

Centralized management of assets and business through a board of directors;

Limited liability for shareholders; and

Transferability of ownership interests (shares)

Question 3

Advantage of corps

Answer 3

raise significant amounts of capital

Question 4

Disadvantage of corps

Answer 4

subject to double taxation

Question 5

Parties that make up corp

Answer 5

Directors
Officers
Shareholders

Question 6

Directors

Answer 6

Directors sit on the board of directors (Board) and are responsible for governing the corp.

Question 7

Officers

Answer 7

Officers serve as agents of the corp. and are responsible for managing the day-to-day matters of the corp.

Question 8

Shareholders

Answer 8

Shareholders own the corp. and generally do not have control over management