Definition of Corporation (What it is, Concept and Definition)

Anonymous society it is a for-profit company model, characterized by having its financial capital divided by shares. Share owners are called shareholders and, in this case, the company must always have two or more shareholders.

In Brazil, Law nº 6.404, of December 15, 1976, known as the "Law of Corporations by Shares" regulates corporations in the country. Article 1 of this law provides that:

"The company or corporation will have the capital divided into shares, and the liability of the partners or shareholders will be limited to the issue price of the subscribed or acquired shares".

Corporations are normally constituted by a general meeting, a board of directors, a fiscal council and a board of directors. They may be referred to as "companies", in this case under the abbreviation of "Cia.", or as "sociedade anónima", with acronym S.A, SA or S/A.

Corporations can be of two categories: privately-held corporations or publicly traded corporations.

Privately Held Corporation

Privately-held corporations do not allow their shares to be available for sale on the stock exchange market, for example. Resources are limited only among shareholders, that is, the company's partners.

Publicly traded corporation

Publicly-held corporations make their shares available for trading on the stock exchanges. securities and over-the-counter markets, thus opening its resources to the public interested in to participate.

Corporation and Limited Partnership

The corporation (S/A) is a company model that works by dividing the capital into shares, with the shareholders (company partners) being responsible for managing the company. The shares of a corporation may be available on the stock market for trading.

A limited liability company (LTDA) is a model of a company organized by quotas, known as Sociedade por Quotas de Liability Limitada. In this model, each partner is responsible for investing certain capital in the company and their responsibilities will be proportional to the amount invested.

Learn more about the meaning of Limited society, LTDA and EIRELI.

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