Corporation – definition and meaning
A corporation is a company. In most countries, it means a large company, often with subsidiaries. In the United Kingdom, however, it can also be a state company. For example, the BBC (British Broadcasting Corporation) belongs to the state. Legally, corporations are separate entities from their owners.
The term does not always have the same meaning as a company. All corporations are companies. However, not all companies are corporations.
For example, let’s suppose you own a small company that repairs lawn mowers, and you employ eight workers. You cannot say that you have a corporation. You can, however, say you have a company.
Corporations are large entities that often do several different businesses. Many corporations have some subsidiary companies.
Corporations are firms in the sense that they are in business to make a profit.
The definition of a corporation can vary from country to country. However, most people globally would agree that a company can be any business.
In fact, in some countries, people even class partnerships as companies. Corporations, on the other hand, mostly have a board of directors whose members are chosen by voting shareholders.
Corporation vs. Company in the US and UK
The website translegal.com explains that the meanings of corporation and company in the US and UK differ slightly.
In the US, a corporation is a company whose shareholders are only liable for the shares they own. If it goes bankrupt, they only lose the value of their shares. However, creditors cannot go after their private assets.
In the UK, corporations are large companies. However, in British English, the term may also refer to a state company.
The Financial Time’s ft.com/lexicon defines a corporation as:
“A large company or group of companies acting together as a single organization. In Britain, a large company or a public organization.”
Types of corporations
There are several types of corporations. However, in most countries there are two basic types:
1. For-profit companies.
2. Not-for-profit companies.
Stock corporations are companies that issue stocks. The term ‘stocks’ means the same as ‘shares.’ The ownership of such corporations is through shares.
We refer to the owners of shares as ‘shareholders.’ We also use the term ‘stockholders’ with the same meaning ‘shareholders.’
Corporations have rights
Corporations are not people. However, the law sees them as legal entities just like humans. In fact, they have many of the same rights and responsibilities that you and I have.
Corporations can be responsible for human rights violations. They can also exercise human rights issues against the state and real individuals.
There are many ways to dissolve corporations. It can be through voluntary action or statutory operation. Stockholders can also dissolve corporations.
Insolvency may be the result of corporate failure. For example, creditors may force the liquidation and dissolution of the company under court order.
Etymologists say that the word ‘corporation’ originates from the Latin corpus, which means ‘a body’ or ‘a body of people.’