Corporation, an organization with a government charter that separates the rights and responsibilities of the organization from those of its members. A corporation, like a person, can buy and sell property, enter into contracts, sue and be sued. It also has the power to adopt by-laws to regulate its internal affairs. Although the term is most frequently used to refer to business firms, corporations are often organized on a not-for-profit basis to conduct the affairs of institutions (such as hospitals, churches, schools, colleges, and libraries), fraternal and other societies, and similar non-business groups.
In most business corporations, the members are the stockholders. Corporations sell stock to obtain funds for setting up or expanding their operations. A publicly held corporation is one whose shares are publicly traded. These shares are bought on the open market; except in the cases of new issues, the proceeds go to the selling stockholder rather than to the corporation. There are also nonstock corporations, including some service and religious organizations, in which no stock is issued and membership is decided on some other basis. A public corporation, such as a municipal corporation, is organized for some governmental purpose.
In the United States, a business corporation usually uses the word corporation or incorporated (abbreviated Inc.) in its title. In Canada, similar organizations, called limited joint-stock companies, use limited (Lid.) in their titles. In Britain, limited is used only for privately held or subsidiary companies; a company whose stock is publicly traded is called a public limited company (PLC).
