What are they? What are they made up of? How do they work?
What is a Corporation?
A corporation is a business owned by a group of people and authorized by the state. To get permission to form a corporation, the planners need a charter. A charter, or certificate, is a document in which you receive state grants to begin and own a corporation business. Corporations are few in number, but large in size unlike proprietorships, owned by one single person. An example of a corporation in the United States could be Ford, Apple, and Walmart.
The owners of a corporation.
The board of directors is the ruling body of the corporation.
The officers of a corporation are the top executives who are hired to manage the business.
The Board of Directors, also shortened to be the directors, are the ruling body of the corporation. They have the responsibility to develop plans and policies to guide the corporation and help officers carry out the specific plans decided upon. The Board of Directors usually is made up of 10 to 25 members, depending on how big the corporation is.
Officers are the top executive who manage the business. These officers consist of a president, vice president, secretary, and treasurer. The president and vice president have the responsibility of marketing, financing, and manufacturing the business. The top officer is the CEO (chief executive officer) and the CFO (chief financial officer) if the head financial chief.
Closed VS Open Corporations
A closed corporation does not offer its shares of stock for public sale. It may also be referred to as a "closely held corporation." Only a few stockholders own a closed corporation. In a lot of states, they do not need to make the companies financial activities known to the public because its stock is generally not publicly sold.
An open corporation is the exact opposite of a closed corporation. It can also be referred to as "publicly pwned corporation." It can be defined as a business that shares stocks for public sale. One way these companies get business and begin selling products is through advertising. The corporation must file a statement with the Securities and Exchange Commission (SEC) that orders detail about the corporation and the amount of stock they invest in. A prospectus, or a summary of features seen in the business that will help the owners decide if they want to buy stock.