What term describes an organization that is distinct and owned by individuals holding shares?

A corporation is defined as a legal entity that is separate and distinct from its owners, who are known as shareholders. This structure allows for the corporation to be owned by individuals who hold shares of stock, which represent their ownership stake in the company. Corporations can enter into contracts, sue or be sued, and own assets in their own names, independent of the shareholders. This separation of ownership and personal liability is a key characteristic of corporations, as it provides shareholders with limited liability protection, meaning they are not personally responsible for the debts or liabilities of the corporation beyond their investment in shares.

Sole proprietorships and partnerships do not have this same legal distinction; they are owned directly by individuals or groups without a separate legal entity status, thus exposing owners to personal liability. A limited liability company (LLC) does provide limited liability protection like a corporation, but it is not owned in shares in the same manner as a corporation; owners of an LLC are referred to as members rather than shareholders. This structural distinction is crucial in understanding the nature of ownership associated with a corporation compared to other business forms.