A corporation, also known as a limited company, is a legal entity that is separate and distinct from its members (shareholders).
When a company is incorporated, it acquires all of the powers of an individual, an independent existence – separate and distinct from its shareholders, and an unlimited life expectancy. In other words, the act of Incorporation gives life to a legal entity known as the corporation, commonly referred to as a company. A company can acquire assets, go into debt, enter into contracts, sue or be sued.
Ownership interests in a corporation are usually easily changed. Shares may be transferred without affecting the corporation’s existence or continued operation.
The following characteristics distinguish a corporation from a Partnership or Sole Proprietorship:
Limited Liability: normally no member can be held personally liable for the debts, obligations or acts of the corporation beyond the amount of share capital the members has subscribed.
Each shareholder has limited liability: A creditor with a claim against the assets of the company would normally have no rights against its shareholders, although in certain circumstances shareholders may be held liable. We recommend that you seek professional legal advice.
Perpetual Succession: because the corporation is a separate legal entity, its existence does not depend on the continued membership of any of its members.