Which statement describes a corporation?

• A. Filed charter, shareholders own, board manages, shareholders have limited liability.
• B. Two or more owners; no central management.
• C. One owner, unlimited personal liability.
• D. Filed articles of organization but no board.

Answer: (A)

A corporation is a separate legal entity formed by filing a charter with the state, giving it a distinct legal existence. Ownership lies with shareholders who hold stock, not the business's personal owners. Governance is by a board of directors elected by the shareholders, which sets broad policy and appoints officers to run daily operations. Shareholders enjoy limited liability, meaning they are not personally liable for the corporation’s debts beyond their investment. This combination of formal charter, owner/shareholder ownership, board-driven management, and limited liability distinguishes a corporation from other business forms like partnerships or sole proprietorships, which do not have this governance structure or liability protection.