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The most important reason for choosing a corporation is to safeguard the personal assets of the owner against potential claims of creditors. These organizations are legal entities separate and different from its shareholders, they act under their names and not under the names of their proprietors. The activities of the owner do not bound these kinds of businesses, except if such owners are agents.Æ' The shareholders have limited liability, which means, that they are liable only to the extent of their capital contributions and not for any debts and obligations of the corporation. They also have the ability to transfer their shares by sale, assignment, pledge, or gift unless they are issued pursuant to certain exemptions from securities registration or there is an agreement with transfer restrictions.Æ' The ownership is transferred when the sale is completed. The transfer of shares is an exclusive right of the shareholder and it does not need the approbation of the corporation or other shareholders. It does not affect the corporations' operations, assets, liabilities and total ownership equity. Another advantage is the convenience to raise capital by issuing stocks. Many investors buy stocks because shareholders have limited liability and the ownership can be easily transferred. A corporation has also perpetual existence. Even if it has a specific period of life, renovating the articles of incorporation can expand it. It can not be influenced by the withdrawal, death, or incapacity of a stockholder, employee or officer.Æ' .
The management of a corporation is given to the board of directors who are chosen by the shareholders. They make policy decisions about the operations of the company. The board of directors nominate officers who are responsible for the day v/s to v/s day operations. The shareholders cannot participate in the management. Only the board of directors and the corporate officers are liable.
