Spolu 2: Corporations vs. Cooperatives

The Corporation

Much of the world’s business is conducted under the concept of “the corporation.” A corporation is a legal entity that buys goods and services, sells good and services, hires employees, owns assets, takes on debt, and distributes profits to the shareholders.

The shareholders are the owners of the corporation. They have invested in the corporation with the intent of receiving future profits. The shareholders can be individuals, individuals pooling their investments as a mutual fund, other corporations, and government.

In bigger corporations, the shareholders usually do not take a big role in management of the business. Rather they hire a manager, often called a “chief executive officer.” Once a year, the shareholders decide whether to retain or release this manager.

In smaller corporations, the shareholders are often the managers of the business. Sometimes such a business has just one shareholder.

Some corporations are operating businesses, with a publicly known name and functions.

Other corporations are mostly owning shares in other corporations. Holding companies, shell companies, and off-shore companies are terms used to describe these businesses. Their primary purpose is to shuffle money to minimize paying taxes. Another…