Which of these statements correctly describes a corporation?

A corporation is a distinct legal entity that is separate from its owners (shareholders). This means that a corporation can sue or be sued in its own name, which grants it the ability to enter into contracts, own assets, and be a party to legal proceedings independently of its shareholders. This characteristic is fundamental to the nature of corporations, allowing for personal liability protection for shareholders, as their personal assets are generally not at risk in legal actions against the corporation.

The other options misrepresent the essence of what a corporation is. For instance, the notion of a corporation being owned solely by one individual with full liability contradicts the basic principles of limited liability that corporations provide. Additionally, the idea of management directly by shareholders without a board does not reflect the corporate structure, where a board of directors typically oversees the management of the corporation. Lastly, stating that a corporation is formed solely as a partnership conflates two separate business structures: corporations and partnerships, each with distinct legal traits and implications.