I want you to write a short paragraph for each of those- definition- w.docx
- 1. I want you to write a short paragraph for each of those: definition, what they use for it, why Solution The various characterstics of corporations are as under: ADVANTAGES Seperate Legal Entity : An organisation is a seperate legal entity with its identity seperate from members ans has a common seal. It can sue & get sued by others. Limited Liability of Stockholders : Each stockholder has limited liability which is restricted as per the memorandum of the company and the no. of shares they hold. Transferable Ownership Rights : The rights can easily be transferred from one shareholder to another by executing a share transfer deed. Continuous LIfe : It has a perpetual life. Thus, an organisation is viewed as an ongoing entity. Lack of Mutual Agency for Stockholders : Unlike a partnership concern, there doesn't exist a mutual agency between stockholders. They are not bound by a contract between them. Its the contract between a shareholder & a company which binds each one of them. Ease of Capital Accumulation: Unlike any other entity, a corporation can easily accumulate funds through the issue of its shares, bonds & securities. They can infuse large funds from the public investments and there can be huge capital formation for their projects. DISADVANTAGES Government Regulation : Government regulates the various policies of the economy and so it regulates corporations too. Government may regulate the prices of various products, the marketing of various products, etc. So the business largely depends upon government regulations, interferences & incentives.
- 2. Corporate Taxation : Tax is imposed on the various corporations earning income on the land & vicinity of a country as per their tax laws. Its a tax on the income earned by these corporations. It is a great source of revenue for the government.