A corporation is a mechanism created to allow different parties to contribute capital, expertise, and labor for the maximum benefit of each party. Management is able to participate in the profits of the enterprise without taking direct responsibility for the operations.

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A corporation is a mechanism created to allow different parties to contribute capital, expertise, and labor for the maximum benefit of each party. The shareholders (investors) are able to participate in the profits of the enterprise without taking direct responsibility for the operations. The management can run the company without the responsibility of personally providing the funds. The shareholders have limited liability as well as rather limited involvement in the company's affairs. However, they reserve the right to elect directors who have the fiduciary obligation to protect their interests.

A Corporation Is a Mechanism Created to Allow Different Parties