By legal definition, a corporation is a legal entity which can own assets, assume liabilities, and tender stock/securities to the public, among other things.  A corporation can be formed in any state by an incorporator under the General Corporation Law of that individual state.  Generally this is accomplished by filing requisite Articles of Incorporation with the state and paying required state fees and taxes.  All stock in a corporation may be owned by a single individual.  As long as the appropriate organization is utilized, and requisite operating procedures are followed, the company and the individual  can remain separate legal entities.  Normally those who own shares in, or work for a corporation are not responsible for the corporation's liabilities.  On the other hand, corporate liablilities often have a negative impact on the value of the company's stock. 

 

Stockholders may become liable for Corporate debt if they have personally guranteed such debt.  In rare cases, stockholders may be held liable for debts of a corporation if a court elects to "pierce the corporate veil" and apply "alter-ego liability".  This removal of the corporate shield ususally results from a corporation’s failure to follow certain, relatively simple formalities, such as having a board of directors, having an annual stockholders meeting, and keeping company books and records.   Such action may also result if the court feels owners are using a corporation to further their own personal adgenda, to defraud business creditors, or to engage in some illegal act.  In general, if a corporation suffers a loss, the corporation itself must bear the cost of that loss to the extent of its own value.  The personal assets of the individual shareholders would not normally be effected.  Shareholders do however indirectly bear any loss by a decline in the value of their stock in the corporation.