1. Chapter 6 Corporate Forms of
Business Ownership
Chapter 6 Corporate
Forms of Business
©2008 Thomson/South-Western
1 Ownership

2. Goals
 Explain the basic structure of a corporation.
 Describe how a corporation is formed and
organized.
Chapter 6 Corporate
Forms of Business
Lesson 6.1 Corporations
2 Ownership

3. Corporation — business owned by a group of
people and authorized by the state in which it
is located to act as though it were a single
person, separate from its owners
Chapter 6 Corporate
Forms of Business
Corporations
3 Ownership

4. Basic Features of a Corporation
 Charter (certificate of incorporation) — official
document through which a state grants the power to
operate as a corporation
 Stockholders — owners of the corporation
– Shares — equal parts of ownership
– Dividends — profits distributed to stockholders on a per-share
 Board of directors — ruling body of the corporation
 Officers — executives hired to manage the business
Chapter 6 Corporate
Forms of Business
basis
4 Ownership

5. Formation of a Corporation
 Prepare the certificate of incorporation
– Name the business
– State the purpose of the business
– Invest in the business
– Pay incorporation costs
Chapter 6 Corporate
Forms of Business
 Operate the new corporation
– Get organized
– Handle voting rights
5 Ownership

6. Lesson 6.2
Close and Open Corporations
Goals
 Distinguish between close and open
corporations.
 Explain the major advantages of the
corporate form of business.
 Explain the major disadvantages of the
corporate form of business.
Chapter 6 Corporate
Forms of Business
6 Ownership

7. Close and Open Corporations
Close corporation
 Also called closely held corporation
 Does not offer shares of stock for public sale
 Owned by just a few stockholders
Open corporation
 Also called publicly owned corporation
 Offers shares of stock for public sale
 Has large number of stockholders
Chapter 6 Corporate
Forms of Business
7 Ownership

8. Advantages and Disadvantages of
Corporations
Disadvantages
 Taxation
 Government
regulations and reports
 Stockholders’ records
 Charter restrictions
Chapter 6 Corporate
Forms of Business
Advantages
 Available sources of
capital
 Limited liability of
stockholders
 Permanency of
existence
 Ease in transferring
ownership
8 Ownership

9. Lesson 6.3 Specialized Types of
Organizations
Goals
 Describe organizations that are specialized
alliances between companies or individuals.
 Describe specialized forms of corporations
formed for tax or nonprofit reasons.
Chapter 6 Corporate
Forms of Business
9 Ownership

10. Organizational Alliances
 Joint venture — agreement among two or more
businesses to work together to provide a good or
service
 Virtual corporation — network of companies that
form alliances among themselves as needed to take
advantage of fast-changing market conditions
 Cooperative — business owned and operated by
user-members for the purpose of supplying
themselves with goods and services
Chapter 6 Corporate
Forms of Business
10 Ownership

11. Chapter 6 Corporate
Forms of Business
Virtual Corporation
11 Ownership

12. Other Limited Liability Corporations
 Limited liability company (LLC) or Subchapter S
corporation — special type of corporation allowed
that is taxed as if it were a sole proprietorship or
partnership
 Nonprofit corporation — organization that does not
pay taxes and does not exist to make a profit
 Quasi-public corporation — business that is
important to society, lacks profit potential, and is
often run by local, state, or federal government
Chapter 6 Corporate
Forms of Business
12 Ownership