Corporate Structure and Operations
A corporation has perpetual existence, regardless of changes in shareholders or employees. Shareholders elect the board of directors, who oversee management and hire the CEO. Officers manage daily operations.
Taxation and Legal Framework
Corporate taxes differ from personal income taxes. Federal and state laws govern corporate taxes, defining filing and payment rules. Corporations follow tax laws as long as they exist.
Types of Corporations
- Close corporations have a limited number of shareholders.
- Non-stock corporations have only members.
- Corporations typically outlive founders and staff, appealing to investors for long-term growth.
Do Corporations exist in perpetuity?
Perpetual Existence Concept
Corporations are often considered to have perpetual existence, similar to the concept of perpetuity in financial instruments like bonds and stocks.
Ownership and Legal Authorization
Corporations are formal organizations authorized by state or national laws, where shareholders elect a board of directors to manage the corporation.
Perpetual Succession and Liability
- Perpetual succession means a corporation exists independently of changes in ownership or membership.
- The legal life of a corporation is perpetual, enjoying the benefits of limited liability and continuous existence.
Implications of Perpetual Existence
Perpetual succession ensures a corporation’s continuous existence, separated from the lifecycle of its stakeholders. The corporation operates independently and can last indefinitely unless specified otherwise in its charter provisions.