What defines a corporation?

A corporation is primarily defined as a business entity that has ownership divided into transferable shares. This structure allows individuals to invest in the corporation by purchasing shares, which represent a portion of ownership in the company. The unique feature of a corporation is that it provides shareholders with limited liability, meaning they are not personally responsible for the debts and obligations of the business beyond their investment in shares. This structure also enables easier transfer of ownership, as shares can be bought and sold without affecting the corporation's operations.

In contrast to this, other forms of business entities, such as sole proprietorships, partnerships, and joint ventures, operate under different legal frameworks and risk structures. A sole proprietorship is owned by a single individual who has unlimited liability, meaning their personal assets can be used to satisfy business debts. Partnerships involve two or more individuals who may have shared responsibility, often with unlimited liability, depending on the agreement. Joint ventures are temporary partnerships formed for specific projects, lacking the broad corporate structure and the ability for stock ownership transfer. Thus, defining a corporation accurately highlights the importance of share ownership and limited liability as key characteristics.