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TYPES OF CORPORATIONS

Corporations may be classified as public or private corporations, stock or nonstock corporations, and domestic or foreign corporations. Public corporations include incorporated political units, such as towns, villages, cities, and school districts. Private corporations may be classified as profit or nonprofit corporations. Profit corporations, private corporations organized for the purpose of making money, are found in nearly every major field of economic activity,

including transportation, manufacturing, business, technology, entertainment, financial, and service fields. These corporations are regulated by the laws of the states in which they operate. If they are engaged in interstate commerce, they are also regulated by federal regulations. Any corporation formed for business purposes is operating for a profit and has capital stock. A bank, a railroad, and a trading firm are stock corporations. Nonprofit corporations, such as the Red Cross, are formed for educational, religious, charitable, or social purposes. A nonprofit corporation in which membership is acquired by agreement, rather than by acquisition of stock, is also a nonstock corporation. Many nonprofit fraternal organizations are nonstock corporations.

Corporations may also be classified as domestic or foreign. A corporation is considered a domestic corporation in the state in which it is incorporated. In all other states in which it may operate, the corporation is considered a foreign corporation. A foreign corporation should not be confused with an alien corporation. An alien corporation is one that is incorporated in another country but is doing business in this country.

Answer the questions:

1. What are the main features of a corporation?
2. What are the benefits of corporative business?
3. What is the stock?
4. What is a private corporation?
5. What are profit-making and nonprofit corporations?
6. What is a public service corporation?
7. In your opinion, which of these corporate forms is the most effective?

TEXT 9.