All states have enacted laws regarding the formation of corporations. The philosophy
of regulating corporations varies from state to state. Generally, the
state of Delaware is reputed for having the most liberal attitude in
regulating corporations. Consequently, a disproportionate number of corporations
have been organized there. Other states impose greater restrictions on
corporate activities. Several states have adopted the provisions of the
Model Business Corporation Act in regulating the organization of a corporation
within their borders.
If a corporation is to operate in one state, it usually
will be incorporated under the laws of that state. However,
if the corporation will engage in interstate commerce (that
is, operate in more than one state), choice of a state of
incorporation should be based on a consideration of initial
and annual taxes, favourable incorporation laws, and minimal
15S restrictions on corporate activities. After a corporation
has been formed in a particular state, it must obtain permission
from other state governments before no doing business in
those states. Permission is obtained by qualifying to do
business in these other states.
General Characteristics
A corporation is a legal form of organization used to carry
on a business enterprise. It is recognized by law to be
an entity separate and distinct from its shareholders,
directors and officers. A corporation has several notable
characteristics, including the power to enter into contracts
and to hold property in its own name, to sue and be sued
in its own name, continuity of life, and free transferability
of ownership interests. Additionally, the liability of
corporate shareholders for the acts of the corporation
is limited to their investment in its stock. Management
of the corporation is centralized in its board of directors.
Disclaimer
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"The
information contained herein is of a general nature and
is not intended to address the circumstances of any particular individual
or entity. Although we endeavor to provide accurate and
timely information, there can be no guarantee that such information
is accurate as of the date it is received or that it
will continue to be accurate in the future. No one should act on such information
without appropriate professional advice after a thorough
examination
of the particular situation.
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International, a Swiss cooperative.
© 2006 KPMG LLP, the
Canadian member firm of KPMG International,
a Swiss cooperative. All rights
reserved."
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