BUS 670 WK3ass - People 1 Duties of Corporate People...

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People 1 Duties of Corporate People Jennifer Baxter BUS 670 Professor Little May 2 nd , 2011
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People 2 The corporate form of business is assembled due largely in part to take advantage of specific tax laws. In addition to tax breaks, a corporation is formed in order to more effectively raise capital from investors without also releasing management responsibilities at the time of investment. Not only does this business entity allow investors to remain exempt from obligations, it also protects them from being held accountable in any liability situation the corporation may face. Despite this lack of responsibility, the shareholders gain ownership in the corporation. It is their duty to elect individuals to a board of directors, to which management is entrusted. Often, the elected directors delegate much of its management responsibilities to officers (Mallor et al, 2010, p 1047). Whether the corporation is for-profit, not-for-profit, or government-owned, and an international organization or a small, one-owner business, a corporation can either be publicly held or closed to the general public. According to Mallor et al (2010), “publicly held corporations tend to be managed by professional managers who own small percentages of the corporation. Nearly all the shareholders of the typical publicly held corporation are merely investors who are not concerned in the management of the corporation.” Moreover, the shares are available to the general public (p 1010). Conversely, a closed corporation has few shareholders and the shares are not available to the general public. In the typical close corporation, the controlling shareholders are the only managers of the business (p 1010). With ownership falling to the shareholders and management to the directors and officers,
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BUS 670 WK3ass - People 1 Duties of Corporate People...

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