Ownership Structure of a Corporation
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The owners of a corporation are called shareholders. Shareholders obtain interest in the business by purchasing shares of stock. They elect a board of directors, who manage the corporation.
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Shareholders have the right to elect directors, vote on mergers and share profits. A company is a separate legal entity from its owners while a corporation is a type of company.
Corporation Types and Ownership
- An open corporation’s ownership shares are available for exchange on a public market. A “close” corporation’s stock is held by only a few persons with no public market. A “open” corporation’s stock is constantly being bought and sold so that ownership varies.
Ownership Rights in a Corporation
- Shareholders own a corporation by purchasing shares. They elect a board of directors to manage the corporation. An open corporation’s shares are traded publicly while a close corporation’s shares are held privately. Ownership of an open corporation varies as shares are constantly traded. Shareholders elect directors, vote on mergers, and share profits. Before opening a business bank account, a certificate of good standing is required. A corporation is a type of company with owners separate from it.