It is an artificial intangible being created by state law, its formation and existence dependent on state enabling statutes.1 It is a legal person that can enter into contracts, own property, sue and be sued in court. It is a taxable entity subject to property, sales, income, and other taxes. It ranges in size from a one-person business to a multinational conglomerate.

Corporations can be classified in a variety*of ways > public or private, for profit or not-for-profit closely held and publicly held. Closely held corporations are corporations in which all or most of the shareholders serve as directors, managers or other officers. The shares of a closely held corporation are subject to restrictions on transfer and there is no public market for the shares. A publicly held corporation has a portion of its shares held by members of the general public and there is a public market for its shares. In the case of a publicly held corporation, ownership and management are separated from each other and the number of shareholders is usually large.

A typical corporation has the following basic attributes

Separate existence. The corporation has an independent» perpetual existence. It is an entity distinct from those who contribute capital and those who manage the business. Centralized management. Management power lies in the board of directors, which often delegates its power to officers. Shareholders elect the directors but cannot control specific board decisions.

Transferability of ownership Interests. Shareholders9 ownership interests (shares) are freely transferable.

Limited Liability. Liability of shareholders is limited to the amount of their investment. Creditors must look only to the corporation's assets for recovery. Limited liability is recognized even if it serves as the motivating reason behind incorporation.

There are exceptions to these tenets. For example» in special circumstances shareholders may be held personally liable beyond their investment i lenders may require shareholders to give personal guarantees before extending credit to the corporationi and, in closely held corporations, shareholders can agree to run the business and may be subject to limitations on the transfer of their stock.

As a legal person, a corporation is entitled to some but not all of the constitutional protections available to individuals. A corporation has the freedom of expression on commercial matters. It is entitled to protection under the equal protection clause of the Fourteenth Amendment. Its property is protected against government deprivation under the Due Process Clauses of the Fifth and Fourteenth Amendments. But a corporation can not claim a Fifth Amendment privilege against coerced self-incrimination and has only a limited Fourth Amendment right against unreasonable searches and seizures.

Corporation law , in general, concerned with the formation9 organization» financing and internal governance of corporate entities. In the United States, these matters are governed by state law, though many of them are subject to federal regulation.

Answer the following questions :
1. What is a corporation?
2. What can a corporation do as & legal person?
3. Why do we say that a corporation is created by state law?
4. What is a private corporation? And what is a public corporation?
5. What is a closely held corporation? What are its major characteristics?
6. What is a publicly held corporation? What are its major characteristics?
7. Are the shares of corporations transferable without exceptions?
8. Under what circumstances will shareholders belield personally liable for the debts of the corporation?
9. As a general rule, does the law recognize the separation of the corporation from its owners and directors?
10. Is the corporation a person entitled to the basic rights guaranteed by the Constitution? To what extent it is and to what extent it is not?