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A corporation is a separate legal entity formed and operated in accordance with state law. As a separate legal entity, the corporation itself may sue, be sued, own property, make contracts in its own name, pay its own taxes, and have its own rights, responsibilities and liability. Basically, a corporation may conduct any legal business purpose unless restricted in the organizational documents. It is the most popular of business organizations and is the most complex.
"Shareholders" are the owners of a corporation. They elect the "Board of Directors" and must vote for or against any major changes in the basic organization of the corporation. In Massachusetts, actions without a "shareholder" meeting require unanimous written consent, and extraordinary actions require two-thirds vote.
A corporation's management and control is vested in the "Board of Directors" who are elected by the "shareholders" of the corporation. "Directors" generally make policy and major decisions regarding the corporation but do not individually represent the corporation in dealing with third persons. Rather, dealings with third persons are conducted through "officers" and employees of the corporation to whom authority is delegated by the "directors" of the corporation. There are instances when the "shareholders" are required to approve the Actions of the Board of Directors (e.g. amendment to the Articles of incorporation, sale of substantially all of the corporate assets, the merger or dissolution of the corporation, etc.).
Corporate "officers" are elected by the "Board of Directors" and are responsible for conducting the day-to-day operational activities of the corporation. Corporate "officers" usually consist of the following: President, Treasurer, and Secretary.
One of the benefits of establishing a corporation is that the "shareholders" are afforded limited liability; it is limited to the "shareholder's" capital contribution. Since the corporation is a separate entity, the corporation is not responsible for the debts of the "shareholders" or vice versa.
"Directors" and "officers" of the business corporation are only liable when they breach their fiduciary duties.