Which form has owners called shareholders and is managed by a board of directors?

Which form has owners called shareholders and is managed by a board of directors?

• A. Sole Proprietorship
• B. Partnership
• C. Corporation
• D. Limited Liability Company

Answer: (C)

The form where owners are called shareholders and the governance is handled by a board of directors is the corporation. In a corporation, people invest by buying shares, which makes them part-owners of the business. Those shareholders elect a board of directors who set broad policies and oversee major decisions, while a hired group of officers (like a CEO and CFO) manages the daily operations. This separation between ownership and management is a hallmark of corporations and often comes with limited liability for owners, meaning their personal assets are protected from most business debts. Other structures don’t feature this combination: a sole proprietorship has a single owner with direct control (and no board or shareholders), a partnership involves multiple owners sharing control and liability, and an LLC blends ownership and management in a more flexible setup with members or managers but not typically a board of directors elected by shareholders.

The form where owners are called shareholders and the governance is handled by a board of directors is the corporation. In a corporation, people invest by buying shares, which makes them part-owners of the business. Those shareholders elect a board of directors who set broad policies and oversee major decisions, while a hired group of officers (like a CEO and CFO) manages the daily operations. This separation between ownership and management is a hallmark of corporations and often comes with limited liability for owners, meaning their personal assets are protected from most business debts. Other structures don’t feature this combination: a sole proprietorship has a single owner with direct control (and no board or shareholders), a partnership involves multiple owners sharing control and liability, and an LLC blends ownership and management in a more flexible setup with members or managers but not typically a board of directors elected by shareholders.