Series 24: Corporations

Corporations

Issuers of securities can take several forms. The most common form of issuer is the corporation. A corporation is a separate legal entity apart from its ownership. It has the following specific characteristics:

• • Limited liability for its owners
• • Easily transferable assets
• • A perpetual existence beyond the life of its ownership
• • A centralized management

To be chartered as a corporation, an issuer must meet three of these four characteristics.

1. 1. Limited liability. Owners can never be held liable for more than the amount of money they invested in the company. Their personal assets and other wealth are not at risk if the corporation goes bust.
2. 2. Perpetual life. Legal separation also allows for a corporation’s continued exist