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Companies and financial accounting
Companies and financial accounting

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1.4 The legal characteristics of the modern corporation

In the literature the term ‘the modern corporation’ indicates a quoted public limited company. According to Armour et al. (2009, p. 5), the modern corporation has all five of the following characteristics:

  1. separate legal personality
  2. limited liability of its shareholders
  3. centralised delegated management under a board structure
  4. transferable shares (in the case of listed companies: freely tradable shares)
  5. absentee investor ownership.

You will look at these each in turn next.