What is the legal process of forming a corporation called?

Prepare for your Partnership and Corporation Exam with engaging flashcards and multiple-choice questions. Each question comes with hints and detailed explanations. Boost your confidence and ace the exam!

The legal process of forming a corporation is called incorporation. This process involves a series of steps through which individuals who want to create a corporate entity file the necessary documents with the appropriate state authority, typically the Secretary of State. This includes submitting articles of incorporation, which formally establish the corporation in legal terms and outline key details such as the corporation's name, address, purpose, and stock structure.

Incorporation grants the new corporation certain rights and benefits, including limited liability protection for its shareholders, the ability to raise capital through the sale of stock, and perpetual existence. The process is designed to create a distinct legal entity that is separate from its owners, thus providing important legal protections and responsibilities.

While registration and other terms may relate to business operations, they do not specifically refer to the formal process of creating a corporation with legal standing.

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