<P> The regulations most favorable to incorporation include: </P> <Table> <Tr> <Th> Regulation </Th> <Th> Description </Th> </Tr> <Tr> <Td> Limited liability </Td> <Td> Unlike a partnership or sole proprietorship, shareholders of a modern business corporation have "limited" liability for the corporation's debts and obligations . As a result, their losses cannot exceed the amount that they contributed to the corporation as dues or payment for shares . That enables corporations to "socialize their costs" for the primary benefit of shareholders; to socialize a cost is to spread it to society in general . The economic rationale is that it allows anonymous trading in the shares of the corporation by eliminating the corporation's creditors as a stakeholder in such a transaction . Without limited liability, a creditor would probably not allow any share to be sold to a buyer at least as creditworthy as the seller . Limited liability further allows corporations to raise large amounts of finance for their enterprises by combining funds from many owners of stock . Limited liability reduces the amount that a shareholder can lose in a company . That increases the attraction to potential shareholders and so increases both the number of willing shareholders and the amount they are likely to invest . However, some jurisdictions also permit another type of corporation in which shareholders' liability is unlimited, for example the unlimited liability corporation in two provinces of Canada, and the unlimited company in the United Kingdom . </Td> </Tr> <Tr> <Td> Perpetual lifetime </Td> <Td> Another advantage is that the assets and structure of the corporation may continue beyond the lifetimes of its shareholders and bondholders . That allows stability and the accumulation of capital, which is thus available for investment in larger and longer - lasting projects than if the corporate assets were subject to dissolution and distribution . That was also important in medieval times, when land donated to the Church (a corporation) would not generate the feudal fees that a lord could claim upon a landholder's death: see Statute of Mortmain . (However a corporation can be dissolved by a government authority by putting an end to its existence as a legal entity . That rarely happens unless the company breaks the law, for example, fails to meet annual filing requirements or, in certain circumstances, if the company requests dissolution .) </Td> </Tr> </Table> <Tr> <Th> Regulation </Th> <Th> Description </Th> </Tr> <Tr> <Td> Limited liability </Td> <Td> Unlike a partnership or sole proprietorship, shareholders of a modern business corporation have "limited" liability for the corporation's debts and obligations . As a result, their losses cannot exceed the amount that they contributed to the corporation as dues or payment for shares . That enables corporations to "socialize their costs" for the primary benefit of shareholders; to socialize a cost is to spread it to society in general . The economic rationale is that it allows anonymous trading in the shares of the corporation by eliminating the corporation's creditors as a stakeholder in such a transaction . Without limited liability, a creditor would probably not allow any share to be sold to a buyer at least as creditworthy as the seller . Limited liability further allows corporations to raise large amounts of finance for their enterprises by combining funds from many owners of stock . Limited liability reduces the amount that a shareholder can lose in a company . That increases the attraction to potential shareholders and so increases both the number of willing shareholders and the amount they are likely to invest . However, some jurisdictions also permit another type of corporation in which shareholders' liability is unlimited, for example the unlimited liability corporation in two provinces of Canada, and the unlimited company in the United Kingdom . </Td> </Tr>

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