What defines a corporation in a legal context?

A corporation is defined in a legal context as a legal entity that is separate from its owners. This separation provides the corporation with certain legal rights and responsibilities, including the ability to enter into contracts, sue and be sued, own assets, and incur liabilities. This distinct status means that the personal assets of the owners (shareholders) are typically protected from the corporation's debts and obligations, which is a fundamental principle of corporate law known as limited liability.

This aspect of corporations allows them to raise capital more easily by selling shares of stock, as investors are often more willing to take risks in a structure that limits their personal financial exposure. Furthermore, corporations can continue to exist independent of their owners’ involvement or changes, granting stability and continuity.

The other options highlight incorrect or incomplete perceptions of what a corporation is. For example, saying a corporation is owned solely by the founder overlooks the possibility of shareholder ownership, which can be diverse and numerous. Describing a corporation as a firm with no legal existence contradicts the established legal framework that defines corporations as recognized entities. Finally, claiming that a corporation is a business structure that cannot generate profit misrepresents the purpose of most corporations, which is indeed to operate in pursuit of profit, benefiting their shareholders.