Considered an autonomous legal entity separate from its shareholders, a corporation possesses most of the legal rights and responsibilities that individuals possess. For example, a corporation has the right to enter into contracts, own assets, and borrow money. Additionally, a corporation may both initiate a lawsuit and be forced to defend itself against a lawsuit. Although corporate profits are taxed both when received by the corporation and when distributed to the shareholders, the major benefit of a corporation is that it provides limited liability for shareholders through the existence of the corporate veil. This mechanism protects corporate shareholders from corporate liability by limiting the extent of a shareholder's liability to the amount he or she invested in the corporation. However, if the corporate veil is ...

  • Loading...
locked icon

Sign in to access this content

Get a 30 day FREE TRIAL

  • Watch videos from a variety of sources bringing classroom topics to life
  • Read modern, diverse business cases
  • Explore hundreds of books and reference titles