The potential separation of ownership from management gives the corpo
QUESTION
The potential separation of ownership from management gives the corporation severaladvantages over proprietorships and partnerships. Explain
1) Because ownership in a corporation is represented by shares of stock, ownership can be readily transferred to new owners. Because the corporation exists independently of those who own its shares, there is no limit to the transferability of shares as there is in partnerships. 2) The corporation has unlimited life. Because the corporation is separate from its owners, the death or withdrawal of an owner does not affect its legal existence. The corporation can continue on after the original owners have¦
drawn. 3) The shareholders liability is limited to the amount invested in the ownership shares. For example, if a shareholder purchased $1,000 in shares of a corporation, the potential loss would be $1,000. In a partnership, a general partner with a $1,000 contribution could lose the $1,000 plus any other indebtedness of the partnership.
ANSWER:
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