Who Legally Owns a Corporation?

What is a corporation, and who owns it?

A corporation is a legal entity that exists independently of its owners. This corporate structure protects shareholders from being held personally liable for business debts. Corporate status also means that the company can, on its own behalf, enter into and enforce contracts, buy and sell property and own assets, and make political contributions.

Because this type of business structure is a separate legal entity from its owners and capable of acting in its own name, the question of who owns a corporation is thornier than you might think. In general, a corporation’s owners are its shareholders, who hold shares, or “stock,” in the company.

The percentage of shares of stock that an individual shareholder owns determines their percentage of ownership. One person who owns more than 51 percent of the outstanding shares is known as a controlling shareholder.

However, multiple people can share ownership in a corporation, and none may own a majority of the company. And, while shareholders aren’t responsible for a corporation's debts, they also do not enjoy all the rights we typically associate with the idea of ownership. For this reason, some have suggested that no one truly owns a corporation.

Shareholders’ rights and roles

A corporation may issue multiple classes of stock to raise capital, each conveying different shareholders’ rights. But, contrary to common conceptions of business ownership, shareholders of any class of stock typically do not have the right to run it or access the corporation's assets.

Common shareholder rights include the ability to inspect corporate records and sue for the directors' wrongful acts, such as breach of fiduciary duty. They also have the following rights.

Voting rights

Voting rights give shareholders a voice in major corporate decisions. Common shareholders vote on major matters such as electing directors, approving mergers, or amending company policies. The weight of their vote depends on how many shares they own, meaning those with more shares have greater influence over the corporation’s future.

Voting typically happens at annual meetings, but emergency meetings can be called. Shareholders can also send proxies to annual meetings to vote for them.

Dividends

Dividends are a portion of the corporation’s profits distributed to shareholders as a reward for their investment. Common shareholders typically receive dividends (if the board of directors declares any) after preferred shareholders, who are given priority and often have a fixed payout. While dividends provide passive income, they are not guaranteed—companies may reinvest profits back into the business to fuel growth instead.

Ownership transferability

Ownership in a corporation is flexible due to the ability to transfer shares. In public companies, shareholders can sell current shares or purchase additional shares of stock without affecting the company’s operations. In private corporations, transferring ownership may require approval from other shareholders or the board of directors. Shareholders also have the right to receive a proportional share of any assets left over after liquidation.

Corporate structure and public vs. private ownership

You can choose to become an S corporation or a C corporation. An S corporation can only issue common stock and has limits on the number of shareholders. The important benefit is that it passes taxation through to the owners’ personal income taxes. A C corporation pays federal taxes on its profits, and its shareholders also pay income taxes on dividends. Unlike an S corp, a C corp can issue multiple classes of stock and grow exponentially. 

To form a corporation, you must file articles of incorporation with the designated state agency, usually the Secretary of State's office. The articles of incorporation generally include the company name and principal address, registered agent's name and address, the business purpose, powers, and planned duration, and the identities of the initial board of directors and corporate officers.

Once you file articles, the corporation is officially a legal entity separate from its shareholders. For C corporations, the articles of incorporation must also include corporate bylaws, the number and type of stock shares authorized for issue, and their value. The initial shareholders are issued shares in exchange for their capital contribution.

Types of shareholders

Shareholders can be divided into two primary categories: common and preferred. These categories define the level of shareholder rights, financial benefits, and claims on company assets.

Common shareholders own equity in the corporation and hold voting rights on significant matters. They can also receive dividends, though these payments depend on the company’s profitability and financial priorities. However, if the company dissolves, common shareholders are last to receive payouts after corporate debts and other obligations are settled.

Preferred shareholders receive priority for dividends, as well as company assets if the company dissolves. Their dividend payments are usually fixed, providing a predictable income stream. However, preferred shareholders typically don’t have voting rights. Preferred shares are ideal for investors seeking stability rather than control over corporate decisions.

Corporate governance

Corporate governance includes the processes that outline how corporations are managed and how decisions are made. Shareholders don’t directly oversee operations—the corporate officers as well as the board of directors actually manage the company and run the business.

The shareholders do choose the board of directors, who are typically also outlined in the articles of incorporation. The duties of the board of directors include setting corporate goals, approving strategies, and making major corporate decisions. 

The directors elected then appoint the corporate officers, also called executives, including the CEO, CFO, and other leaders who are in charge of day-to-day operations. Both the corporate officers and directors owe a fiduciary duty to the shareholders, which means the decisions they make should maximize shareholder value.

The idea is to provide a separation of powers so corporations can operate efficiently and protect shareholder value. The organization’s corporate bylaws should lay out the corporate formalities in more detail. 

Public vs. private corporations

Corporations are categorized as either public or private based on how their shares are owned and traded. Large, publicly traded corporations can have thousands of shareholders, so each one's ownership percentage is significantly diluted. With a closely held, privately traded business, a few people may have substantial ownership.

This is because public corporations sell shares on stock exchanges, so anyone can invest, and shares can be freely traded. This makes it easier to raise capital, but can make it more difficult to determine who owns the corporation. Publicly traded corporations must also follow strict financial reporting rules to maintain transparency about what the corporation owns, its debts, and other information investors want to know. 

Private corporations are owned by a small group, such as founders, family members, or a few investors. Shares are not traded publicly and profits may pass through to the owners’ personal income taxes. Private corporations enjoy more flexibility and privacy along with the benefits of limited liability for the owners’ personal assets, but they may face challenges raising large amounts of capital.

How to find out who owns a corporation

Finding out who owns a corporation can help you understand its leadership and operations—but it’s easier for public companies than private ones. The Securities and Exchange Commission (SEC) requires publicly traded corporations to file reports that list major shareholders, the board of directors, and other ownership details. These filings are required to maintain corporation status and are accessible to anyone through the SEC’s EDGAR database.

Private corporate ownership isn’t as transparent. You can search state business registries, where corporations file annual reports and articles of incorporation, which often list registered owners, directors, and business managers. You may also be able to find a limited liability company in these records. If you can’t find ownership details in public records, you can use business data tools or work with legal services that specialize in corporate research.

FAQs

Do shareholders manage the corporation?

No, shareholders don’t handle daily operations. Instead, they elect a board of directors to oversee the company’s direction. The board appoints executives, like the CEO, who manage the operations. This structure keeps ownership separate from management for smoother decision-making and gives limited liability to shareholders, directors, and officers to protect their personal assets.

How is ownership in a corporation determined?

Ownership is determined by the number of shares a person holds relative to the total shares issued by the corporation. For example, if you own 100 out of 1,000 shares, you own 10% of the company. The more shares you hold, the larger your ownership stake and influence.

Can someone own 100% of a corporation?

Yes, it’s possible. If a single person or entity owns all the issued shares, they fully control the corporation. This often happens with small private corporations, where founders or close groups maintain full ownership to retain control over corporate assets, decisions, and profits. However, forming a corporation still provides limited liability protection because the business entity is separate from the person’s own assets.

What happens to corporate ownership if a shareholder sells their shares?

When a shareholder sells their shares, ownership transfers to the buyer. The seller loses their rights tied to those shares, including voting power and dividends. In public corporations, this transfer is seamless, while private corporations may require board approval.

What happens to corporate ownership during a merger or acquisition?

During a merger, ownership changes as shares of the two companies are combined, exchanged, or converted. In acquisitions, the acquiring company often buys out shares, consolidating ownership under new leadership. Shareholders may receive compensation through cash or new shares in the merged business entity.