The Importance of a Corporation

By Mara Hernandez-Capili

A corporation is basically a group of people with shares or stocks from a company that make them part-owners of that company. A company may either be a privately held corporation or a publicly held corporation. A privately held corporation is one where the shareholders know each other. They are usually related to each other, some corporations have the whole family as the shareholders. An example of a privately listed company is Cargill Corporation. A publicly listed company is one where shares are sold to anyone who can afford it and who pass up on some tests/ requirements the company has in addition. Shareholders of publicly listed companies do not virtually know each other.

An advantage of a corporation is that the owners have limited liability. When the company was engaged in a lawsuit, the corporation is liable for its settlement fees and not the owners or major stockholders. The worst thing that can happen is for the company the close down. In the case of sole proprietorship, the owner of the business is considered as the company itself thus he will be held liable should he lost in the lawsuit. Corporations limit the risk and protect its shareholders.

A corporation gives the company huge amounts of initial capital. This is so because more and more people would be buying shares in the hope of gaining annual dividends from the company. With this, it would then be easy for people to invest in the company because of its attractive business packages.

Corporations are known to exist eternally as long as there are shareholders that possess their stocks. This lies in the value that the company is strong and stable. Investors are also attracted to the companys excellent business operations made possible because of the corporations huge capitals. A corporation has a good operations systems and working environment because of the huge capital invested on equipments and manpower which makes it attractive for future investors.

There are a lot of privately-held companies nowadays who switch to making their company publicly-owned for the reasons of: expansion and improvement or sophistication of business models. - 23208

About the Author:

Mara Hernandez-Capili is a writer and a researcher on Business and Finance. Learn more on how to increase your financial intelligence by learning about emini trading today. Start earning extra income by making your money work for you through the emini trading system. "Start your journey to financial freedom not tomorrow, not next week, but today."