WHAT IS A CORPORATION

Like the Limited Liability Company (LLC), the corporation is one of the U.S. legal forms for companies that also have been embraced by foreign company founders. This is the case regardless of whether the founder wants to be economically active in the U.S. or not. The choice of “corporation” as a legal form for the company is also interesting for the founder if he or she is planning a small or medium-size company, and not necessarily a large one. A corporation is, of course, a U.S. American variation of a stock corporation (Aktiengesellschaft) and the German AG is not suitable for smaller companies. The corporation is very different. The legal form has a whole series of advantages, which make the corporation suitable for all types of newly-founded companies. What are these? We will explain them to you. But let’s perhaps start with information about how a corporation is built.

Formation of a corporation
Because the corporation is a joint-stock company, there are, of course, shares. However, sometimes they exist only on paper. “Authorized shares” are differentiated from “issued shares”. “Authorized shares” refer to the number of shares that are entered in the Articles of Incorporation (company statute). None of these shares, however, can actually be given to shareholders. Those that are given out are called “issued shares”. The number of these can of course be “0”.

The founder of a corporation can therefore, but does not have to, take shareholders on board. He or she can therefore found and lead a corporation as an individual. This is possible, although in the case of a corporation there are bodies to which appointments must be made.