What distinguishes a corporation as a separate entity?

A corporation is recognized as a separate legal entity, which means it has its own independent existence, separate from that of its owners or shareholders. This distinction is fundamental to corporate law, providing the corporation with the ability to enter into contracts, sue and be sued, own assets, and incur liabilities independently of its shareholders.

This separate existence is essential for several reasons. First, it allows the corporation to continue operating even if ownership changes hands or if individual shareholders leave, which ensures stability and longevity. Second, it establishes that the personal assets of shareholders are typically protected from the corporation's debts and liabilities, creating a barrier between personal and corporate financial responsibility. This principle of distinct existence underpins the legal framework of corporations, allowing them to function autonomously in the business world.

The other options focus on aspects related to corporations but do not capture the essence of what separates a corporation as a distinct legal entity. Limitation of liability pertains to the protections afforded to shareholders and owners, while shareholder rights and sector classification address specific areas of corporate governance and operational categorization, rather than the foundational legal principle of distinct existence.