Civilopedia entry[edit | edit source]
As businesses grow, they often find it necessary to raise large amounts of operating capital in order to expand their operations beyond a certain point, or to meet operating expenses. In these cases, one option available is to form a corporation and "go public", or sell shares of the business to investors. This arrangement allows the business to expand rapidly, while spreading the risks of the expansion among many people, reducing individual risk. Corporations also have legal advantages such as the right to sue, the limitation of liability for the corporation's debt to the amount originally invested by the owners. Corporations as legal entities have existed since ancient Rome, although the joint-stock company as it is known today didn't begin operating until sometime in the 16th century.