The characteristics of a corporation are explained below.
Perpetual existence: A corporation is its own distinct legal entity. It enjoys perpetual existence and can only be terminated by law. The death of any of the owners of a corporation does not signify the end of the company. This characteristic makes a corporation a more secure form of investment, providing assurance to shareholders and creditors that they will be repaid even in the event of the death of the owners.
Limited liability: Lenders, as well as financiers seeking payback of money due by the firm, cannot access the individual property of investors. Creditors can only satisfy their claims using business assets.
Separate legal entity: In the eyes of the law, a company is recognized as a distinct entity. It has the ability to enter into contracts using its own name, avail services, take loans, etc. As a company is not a natural person, the board members, on behalf of the company, perform actions utilizing the company’s seal. The authority of the separate entity is vested in the seal, and any contract or obligation executed with the seal is considered valid under the law.
Ease in the transfer of ownership: A company can easily transfer its ownership by issuing stocks for the company. Stocks are issued to raise money from the public. The owners of the common stocks also known as equity are the shareholders who legally own a part of a company. The stocks can be traded back and forth in the open market, and the shareholders can also trade the stocks openly, making the transfer of the ownership in a corporation that is allowed the issue of shares by the government very simple.