FORMS OF

BUSINESS
ORGANIZATIONS

CORPORATION

CORPORATION
Another type of business
structure . A corporation is a
business organization that has a
separate legal personality from
its owners. Ownership in a stock
corporation is represented by
shares of stock.

CORPORATION ... (Contd)

The owners ( stockholders)

enjoy limited liability but have
limited involvement in the
companys operations. The board
of directors, an elected group
from stockholders, controls the
activities of the corporation.

CORPORATION ... (Contd)

The ownership of the business

enterprises ranges from five to more
persons. This usually holds true for
medium and big business enterprises.
The owner of this corporation could
number even in millions and could come
and go since the ownership will be based
on stocks available in the stock market.
The generic name of the owner is called
corporator.

SHAREHOLDER
A shareholder is a person who owns stock in a
corporation. In many small corporations, the
shareholders act as the officers and directors, but
many shareholders do not have these roles in
large corporations. Sometimes small corporations
have shareholders who are not officers, such as
when the stock is in one spouse's name and the
other spouse runs the business. Specific laws
regarding issuance of shares and shareholders'
rights vary from state to state, and are listed in
the various state statutes. Shareholders must
meet once a year to elect directors and make
other major decisions for the corporation.

BOARD OF DIRECTORS
The board of directors is the
controlling body of a corporation that
makes major corporate decisions
and elects the officers. It usually
meets just once a year. In most
states, a corporation can have one
director (who can also hold all offices
and own all the stock). In a small
corporation, the board members are
usually also officers.

BOARD OF DIRECTORS ... (Contd)

The board of directors

usually meets just once a
year. Examples of
procedures which must
be approved by the board
of directors include:

BOARD OF DIRECTORS ... (Contd)

Declaring a dividend
Electing officers and setting the
terms of their employment

Amending bylaws or the articles of

incorporation
Any corporate mergers,
reorganizations or other significant
corporate transactions

BOARD OF DIRECTORS ... (Contd)

Directors of a corporation owe "duties

of loyalty and care" to the corporation.
Generally, this means the directors
must act in good faith, with reasonable
care, and in the best interest of the
corporation. If a director stands to
personally gain from a transaction with
the corporation, he or she must
disclose this fact and refrain from
voting on the matter, if possible.

OFFICERS
Officers are appointed by the
board of directors to run the dayto-day operations of the
corporation. Commonly, and by law
in many states, a corporation will
have at least three officers:

OFFICERS ... (contd)

President
Treasurer or Chief Financial Officer
Secretary
Officers do not have to be shareholders
or directors, but they can be. There is
no limit on the number of officers, and
usually no limit on the number of
offices any one person may hold. In
fact, in most cases, the same person
can hold all offices.

ADVANTAGES :

Limited liability
Ownership is transferable
Continuous existence
Separate legal entity
Easier to raise capital than it might
be with other business structures
Possible tax advantage as taxes
may be lower for an incorporated
business

DISADVANTAGE:

A corporation is closely regulated

More expensive to set up a corporation
than other business forms
Extensive corporate records required,
including documentation filled annually
with the government
Possible conflict between shareholders
and directors
You may be required to prove residency
or citizenship of directors

THANK
YOU !!!
BRITNEY ALBEZA