Corporations allow individuals and
groups to create a new entity for the
purpose of doing business. The corporation
shields its creators from liability
beyond their investment. If the business
goes bad, the corporation takes
the fall, not the shareholders. The
incorporators may lose their investment
in the company, but they do not
usually lose their personal belongings.
Because the incorporators are protected
from complete financial ruin, they
are more likely to take calculated
business risks. This in turn encourages
economic growth and prosperity.
From a creditor's perspective, however,
corporations can sometimes be
used to accomplish an injustice. Such
seemed to be the case in Statesville
Stained Glass, Inc. v. Lane Construction,
recently decided by the North
Carolina Court of Appeals.