What type of business entity is owned by shareholders and managed by directors?

The type of business entity that is owned by shareholders and managed by directors is a corporation. In a corporation, the shareholders, who are the owners, invest capital into the entity and receive shares in return. This structure allows them to limit their personal liability for the debts and obligations of the corporation to the amount they invested.

The management of the corporation is carried out by a board of directors, who are elected by the shareholders. The directors set broad policies and make major decisions for the corporation, while day-to-day operations are typically overseen by corporate officers appointed by the board. This separation of ownership and management is a defining characteristic of corporations and provides both governance and a layer of protection for shareholders.

Other business entities like partnerships, limited liability companies, or trusts have different structures and management roles. Partnerships are typically managed by the partners themselves, whereas limited liability companies often have more flexible management structures that might not involve a board of directors. Trusts are fundamentally different as they involve a trustee managing property on behalf of beneficiaries and are not necessarily structured around ownership by shareholders.