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ch 11 notes1 - Chapter 11 Corporate form of organization An...

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Chapter 11 Corporate form of organization An entity created by law Existence is separate from owners Has rights and privileges Ownership can be Privately held: Private Company Owners are select individuals Publicly held: Public Company Ownership is available to the public at large Advantages vs. Disadvantages of Corporate Form of Business Advantages Separate legal entity: can enter into contracts in its own name Limited liability of stockholders: a shareholder is liable only to the extent of their investment into the corporation (# of shares) Transferable ownership rights: if you don’t want to hold onto ownership, you can sell your shares to get rid of it Continuous life: the corporation is going to go on even after owners die Lack of mutual agency for stockholders: no one stockholder can bind another stockholder by his or her acts Ease of capital accumulation: anyone can own shares of stock so you can accumulate capital easily Disadvantages
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