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A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity a legal entity recognized by private and public law 'born out of statute" a legal person in legal context and recognized as such in law for certain purposes. Early incorporated entities were established by charter i.e. by an ad hoc act granted by a monarch or passed by a parliament or legislature. Most jurisdictions now allow the creation of new corporations through registration. Corporations come in many different types but are usually divided by the law of the jurisdiction where they are chartered based on two aspects by whether they can issue stock, or by whether they are formed to make a profit.
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One of the most attractive early advantages business corporations offered to their investors, compared to earlier business entities like sole proprietorships and general partnerships, was limited liability. Limited liability means that a passive shareholder in a corporation.
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Where local law distinguishes corporations by their ability to issue stock, corporations allowed to do so are referred to as stock corporations; one type of investment in the corporation is through stock, and owners of stock are referred to as stockholders or shareholders. Corporations not allowed to issue stock are referred to as non-stock corporations.
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There is some overlap between stock/non-stock and for-profit/not-for-profit in that not-for-profit corporations are always non-stock as well. A for-profit corporation is almost always a stock corporation, but some for-profit corporations may choose to be non-stock. To simplify the explanation, whenever "stockholder" or "shareholder" is used in the rest of this article to refer to a stock corporation, it is presumed to mean the same as "member" for a non-profit corporation or for a profit, non-stock corporation. Registered corporations have legal personality and their shares are owned by shareholders.
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In American English, the word corporation is most often used to describe large business corporations In British English and in the Commonwealth countries, the term company is more widely used to describe the same sort of entity while the word corporation encompasses all incorporated entities. In American English, the word company can include entities such as partnerships that would not be referred to as companies.
A corporation, and the more favorable tax treatment of either a sole proprietorship or partnership was developed. While not a corporation, this new type of entity became very attractive as an alternative for corporations not needing to issue stock.
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The word "corporation" derives from corpus, the Latin word for body, or a "body of people". By the time of Justinian (reigned 527–565), Roman law recognized a range of corporate entities under the names Universitas, corpus or collegium. These included the state itself the Populus Romanus, municipalities, and such private associations as sponsors of a religious cult, burial clubs, political groups, and guilds of craftsmen or traders. Such bodies commonly had the right to own property and make contracts, to receive gifts and legacies, to sue and be sued, and, in general.
In the United States, forming a corporation usually required an act of legislation until the late 19th century. Many private firms, such as Carnegie's steel company and Rockefeller's Standard Oil, avoided the corporate model for this reason (as a trust). State governments began to adopt more permissive corporate laws from the early 19th century, although these were all restrictive in design, often with the intention of preventing corporations from gaining too much wealth and power New Jersey was the first state to adopt an "enabling" corporate law, with the goal of attracting more business to the state.
