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CORPORATION The three main forms of business ownership are sole proprietorship partnership and corporation In terms of size influence and visibility the corporation has become the dominant business form existing in the United States Canada Japan the nations of Western Europe and in most other free-market economies Origins The first corporations were towns universities and monastic orders in the Middle Ages They differed from partnerships in that they existed independently of any particular membership and all assets and holdings belonged to the corporation itself A unique feature of corporate ownership was spelled out by the English courts during the 15th century in a legal principle called limited liability This means that what is owed to the corporation is not owed to the individuals in the group that make up the corporation and what the group owes is not owed by the individuals that make it up Hence if a corporation goes bankrupt and is sued by its creditors for recovery of debts the individual members of the corporation are not individually liable In the United States this feature was further refined by an 1886 ruling of the Supreme Court in the case of Santa Clara County vs Southern Pacific Railroad in which the court ruled that a corporation is to be regarded as a person A modern corporation is chartered by a state or nation and owned by individuals or institutions who have purchased shares representing fractions of the firms holdings Such holdings called assets include cash and other securities equipment real estate and any unsold goods manufactured by the corporation Thus someone owns part of a corporation only so long as he possesses shares in it Some corporations are closely held meaning that all the shares are in the hands of a specific individual or small group and are not traded to the public Ownership and control In the
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