section_path: Ownership and control/Formation
section_name: Formation
paragraph_text: Formation
  
  Historically, corporations were created by a charter granted by the government. Today, corporations are usually registered with the state, province, or national government and regulated by the laws enacted by that government. Registration is the main prerequisite to the corporation's assumption of limited liability. The law sometimes requires the corporation to designate its principal address, as well as a registered agent (a person or company designated to receive legal service of process). It may also be required to designate an agent or other legal representatives of the corporation.
  
  Generally, a corporation files articles of incorporation with the government, laying out the general nature of the corporation, the amount of stock it is authorized to issue, and the names and addresses of directors. Once the articles are approved, the corporation's directors meet to create bylaws that govern the internal functions of the corporation, such as meeting procedures and officer positions.
  
  In theory, a corporation cannot own its own stock. An exception is treasury stock, where the company essentially buys back stock from its shareholders, which reduces its outstanding shares. This essentially becomes the equivalent of unissued capital, where it is not classified as an asset on the balance sheet (passive capital).
  
  The law of the jurisdiction in which a corporation operates will regulate most of its internal activities, as well as its finances. If a corporation operates outside its home state, it is often required to register with other governments as a foreign corporation, and is almost always subject to laws of its host state pertaining to employment, crimes, contracts, civil actions, and the like.
  
  A corporation's spatio-temporal positioning is legislatively arbitrary to its formation. Often the market defines these boundaries according to the invisible hand theory. Instead, the two elements of a corporation that define its legislative identity and are therefore nonarbitrary delimitations to its formation and existence are which jurisdiction (or sets of jurisdictions in the case of international corporations) it belongs to, and what subject area or areas it performs activities within.