A corporation
(also called "company") is a legal entity that has its
own legal personality which is distinct from its owners (called shareholders)
and the individuals who manage and run its affairs and business (called
directors and officers).
Every
corporation is comprised of shareholders, directors and officers. Shareholders,
as the name implies, are the ones who hold (i.e., own) the shares in the
corporation. By reason of the votes that are usually attached to the shares,
the shareholders control the corporation. If there is only one shareholder,
that person has absolute control of the corporation. If the corporation has
numerous shareholders, control of the corporation depends on who has a majority
of the voting shares. However, the shareholders do not directly manage the
corporation. They exercise their influence by electing and removing directors
and approving or disapproving major corporate decisions.
In most small
businesses, these distinctions are somewhat moot in that often the same person
acts in all these capacities.
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