Final answer:
Early corporations were characterized by their status as separate legal entities, which protected individual investors from personal liability for corporate actions and debts. The Dutch East India Trading Company is considered the birth of the modern corporation. Stock and bond sales enabled these entities to raise capital and grow without exposing investors to legal risks beyond their investment.
Step-by-step explanation:
The characteristics of early corporations revolved around their structure as a single entity, legally distinct from the individuals involved in them. Their purpose was to engage in business activities with the ability to raise capital from investors while limiting their personal liability. This financial structure was epitomized by the Dutch East India Trading Company, founded in 1602, which historians consider the birth of the modern corporation.
Regarding the liability for the activities of the corporation, it was the corporation itself that was liable, not the individual shareholders. This was revolutionary in that it allowed individuals to invest without the risk of personal financial ruin beyond their investment should the corporation fail or face legal issues. This separation of entity and individual was foundational as it facilitated the attraction of investment and the growth of large-scale businesses.
The sale of stocks and bonds became mechanisms for raising capital, allowing investors to partake in the profits of a corporation without being legally liable for its debts beyond their investment amount. This structure laid the groundwork for the expansion of industries and the modern growth of corporate America.