Term
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Definition
| One (agent) who acts on behalf of another (principal) |
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Term
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Definition
| All authority that a principal expressly gives to an agent plus any authority that can reasonably be implied from the express grant |
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Term
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Definition
| Authority that a third party reasonably believes an agent has based on the principal's holding the agent out as being the principal's agent. |
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Term
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Definition
| Shareholders who are dissatisfied with most fundamental corporate changes have an opportunity to "dissent" and demand that the corporation pay them the fair value of their shares rather than remain shareholders of a fundamentally changed corporation (also called dissenter's rights) |
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Term
| Articles of Incorporation |
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Definition
| Formation filing documents of a corporation. The articles are filed with the state in which the business is located. The articles include: name, names and addresses of the corporation's registered agent (on whom process may be served if the corporation is sued); names and addresses of each of the incorporators; and, number of shares authorized to be issued. One or more classes of shares must have unlimited voting rights. |
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Term
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Definition
| Formation filing documents of a LLC. The articles include: statement that the entity is an LLC; name, which must include an indication that it is an LLC; street address of LLC's registered office and name of its registered agent; statement to the effect that mgmt. is to be vested in managers; and, names of the persons who will be managing the company. |
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Term
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Definition
| Shares described in the articles |
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Term
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Definition
| A director will not be liable to the corp. for acts performed or decisions made in good faith, in a manner the director believes to be in the best interest of the corp., and with the care an ordinarily prudent person in a like position would exercise. |
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Term
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Definition
| Contain rules for running the corporation. Not part of the articles of incorporation and are not required to be filed with the state. |
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Term
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Definition
| Corporation that is taxed as an entity distinct from its owners. |
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Term
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Definition
| Authority granted by a state authorizing a foreign corporation to transact business within the state. |
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Term
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Definition
| Court order used by a creditor of an individual partner may obtain an interest against an individual partner's share of profits. |
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Term
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Definition
| The articles of incorporation can eliminate the board of directors and provide that the shareholders shall have the power of the board, but this is not typical except in small corporations. |
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Term
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Definition
| Class of stock that will carry with it all rights of stock ownership. |
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Term
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Definition
| One or more corporations joining together to form a new corporation. Each constituent corporation ceases to exist after consolidation; only the new corporation goes on. |
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Term
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Definition
| Admitting liability in a lawsuit. |
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Term
| Corporate Opportunity Doctrine |
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Definition
| If a director is presented with a business opportunity that would be of interest to his corporation (i.e., he is told that land the corporation is interested in purchasing has just been put on the market), generally the duty of loyalty prohibits the director from taking the opportunity for himself. |
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Term
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Definition
| Legal entity distinct from its owners (called "shareholders" or "stockholders") and managers. Created by complying with a state incorporation statute. |
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Term
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Definition
| A party who treats a business as if it were a validly formed corporation will be legally barred from claiming in a legal proceeding that the corporation was not validly formed. This applies to third parties who treat the business as a corporation as well as to the business itself. |
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Term
| Cumulative Preferred Shares |
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Definition
| Entitled to a fixed amount of money before distributions can be made with respect to nonpreferred shares. If a dividend is not declared in a particular year, the right to receive the preference accumulates and must be paid before nonpreferred shares may be paid any dividend. |
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Term
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Definition
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Term
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Definition
| Distribution of corporate profits as ordered by the directors and paid to the shareholders. |
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Term
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Definition
| If all of the requirements for incorporation are not met, the business might still be treated as a corporation (and protect its owners, officers, and directors from personal liability). If the incorporators made a good faith attempt to incorporate, and operated as if they had incorporated, the business will be treated as a corporation in all respects, except the state may bring an action challenging the corporation's status. |
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Term
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Definition
| If all of the requirements for incorporation are met, the corporation is said to be "de jure," and its existence will be recognized for all purposes. |
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Term
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Definition
| Bonds. Represent a creditor-debitor relationship with the corporation whereby the corp. has borrowed funds from "outside investors" and promises to repay them. |
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Term
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Definition
| When a corp. has a legal cause of action against someone but refuses to bring the action, the shareholders may have the right to bring a shareholder derivative action to enforce a corporation's rights. Such an action may be brought against director of the corporation or outsiders. |
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Term
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Definition
| Individuals with the general authority and responsibility for mgmt. of the corporation. In most corporations, the board of directors delegates the power to run the corp. on a day-to-day basis to the officers. |
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Term
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Definition
| Shareholders who are dissatisfied with most fundamental corporate changes have an opportunity to "dissent" and demand that the corporation pay them the fair value of their shares rather than remain shareholders of a fundamentally changed corporation (also called appraisal rights) |
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Term
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Definition
| Change in the relationship of the partners caused by any partner ceasing to be associated in the carrying on of the business. The remaining partners have the right to continue the business. |
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Term
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Definition
| Partnership is terminated and the business must be wound up. |
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Term
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Definition
| Corp. incorporated within the state. |
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Term
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Definition
| Stocks. An instrument representing an investment in the corporation whereby its holder becomes a part owner of the business. |
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Term
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Definition
| State laws that require persons conducting a business under an asssumed name to file with the state the name under which the business is conducted and the real names and addresses of all persons conducting the business. |
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Term
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Definition
| Duties of utmost loyalty and good faith owed by an agent to her principal. |
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Term
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Definition
| Corporation doing business in a state other than its state of incorporation. |
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Term
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Definition
| Issues that might fundamentally change the nature of the entity. Examples include: amendments to the articles, dissolutions, mergers, consolidations, share exchanges, and sales of all or substantially all of the entity's assets outside the regular course of the entity's business and, admitting a new general partner. |
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Term
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Definition
| Assoc. of two or more persons who agree to carry on as co-owners of a business for profit. |
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Term
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Definition
| Person in either a general or limited partnership with unlimited personal liability and the right to take part in the mgmt. of the business. |
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Term
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Definition
| When a corporation is faced with the prospect of being taken over and the board of directors wants to resist the takeover attempt, it will pay the person or company attempting the takeover to abandon its takeover attempt. |
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Term
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Definition
| Party responsible for forming the corporation by filing articles or incorporation with the state. |
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Term
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Definition
| Duty of a business entity to reimburse those properly acting on behalf of the entity for losses incurred. |
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Term
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Definition
| The corporation issues some or all of the authorized shares. |
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Term
| Joint and Several Liability |
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Definition
| Liability whereby creditors may sue partners jointly or sue partners individually. |
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Term
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Definition
| Assoc. of persons with the intent of engaging in a single business venture for profit. |
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Term
| Limited Liability (of shareholders, limited partners, and LLC members) |
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Definition
| Creditors are prevented from accessing the personal assets of the individual. It is limited to their investment in the entity. |
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Term
| Limited Liability Company (LLC) |
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Definition
| Form of business entity that offers its owners ("members") one of the main advantages of the corporate form of business (i.e., they are not personally liable for the obligations of the company) and all of the tax advantages of a partnership. It is a hybrid business org. that combines characteristics of corps., partnerships, and limited partnerships. |
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Term
| Limited Liability Partnership (LLP) |
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Definition
| Assoc. of two or more persons who agree to carry on as co-owners a business for profit. Differs from a general partnership in that a partner in an LLP is not personally liable for the obligations or liabilities of the partnership arising from errors, omissions, negligence, malpractice, or the wrongful acts committed by another partner or by an employee, agent, or representative of the LLP. Neither are the partners liable for partnership contracts. |
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Term
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Definition
| Partner with limited liability as to his personal assets, risking only his investment in the limited partnership. He is not an agent of the partnership. |
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Term
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Definition
| Partnership made up of one or more general partners (who have personal liability for all partnership debts) and one or more limited partners (whose personal liability for partnership debts generally is limited to their capital contributions). |
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Term
| Locking Up The Crown Jewels |
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Definition
| When a corp. is faced with the prospect of being taken over and the board of directors wants to resist the takeover attempt, it will give a third party an option to purchase the company's most valuable assets. |
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Term
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Definition
| Partnership made up of one or more general partners (who have personal liability for all partnership debts) and one or more limited partners (whose personal liability for partnership debts generally is limited to their capital contributions). |
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Term
| Locking Up The Crown Jewels |
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Definition
| When a corporation is faced with the prospect of being taken over and the board of directors wants to resist the takeover attempt, it will give a third party an option to purchase the company's most valuable assets). |
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Term
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Definition
| Owners of a limited liability company. |
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Term
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Definition
| Involved one or more corporations merging into another corporation. One corp. survives the merger and continues in existence and the other merging corps. cease to exist following the merger. |
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Term
| Noncomulative Preferred Shares |
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Definition
| Right to a dividend preference is extinguished if it is not declared for that year. |
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Term
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Definition
| Internal document signifying the agreement between members of an LLC. |
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Term
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Definition
| Shares in shareholders' hands |
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Term
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Definition
| Specific face value placed on stock |
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Term
| Piercing the Corporate Veil |
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Definition
| Courts will hold the shareholders, officers, or directors of a corporation liable because the legislative privilege of conducting business in corporate form is being abused. Typical causes for this include commingling personal funds with corporate funds, inadequate capitalization, and committing fraud on existing creditors. |
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Term
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Definition
| When a corporation proposes to issue additional shares of stock, current shareholders often want to purchase some shares in order to maintain their proportional voting strength through special rights that must be granted in the articles of incorporation. |
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Term
| Participating Preferred Shares |
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Definition
| Preferred stock that participates in dividends after the common stock has received its proportionate share. |
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Term
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Definition
| Ownership interest in a corp. that is preferred in some manner (dividends or assets) over the common stockholders in the case of liquidation. |
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Term
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Definition
| Individuals who form a corp. They are responsible for the procurement of commitments for capital that will be used by the corp. after formation. They enter into contracts with third parties who are interested in becoming shareholders and might also enter into contracts for goods or services to be provided to the corp. once it is formed. |
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Term
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Definition
| Written authorization given to third parties for the purposes of voting shares on behalf of the shareholder. |
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Term
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Definition
| Minimum number of parties that must be present for a valid vote or transaction. |
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Term
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Definition
| Person on whom process may be served if the limited partnership, LLC, or corp. is used. |
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Term
| Revised Model Business Corporation Act (RMBCA) |
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Definition
| Uniform law governing corporations that has been adopted by a slight majority of the states. |
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Term
| Revised Uniform Limited Partnership Act (RULPA) |
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Definition
| Uniform law governing limited partnerships that has been adopted in the majority of states. |
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Term
| Revised Uniform Partnership Act (RUPA) |
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Definition
| Uniform law governing partnerships that has been adopted by the majority of states. |
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Term
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Definition
| Corp. electing to be taxed like a partnership and yet retaining the other advantages of the corporate form (special restrictions apply). |
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Term
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Definition
| When a corp. is faced with the prospect of being taken over and the board of directors wants to resist the takeover attempt, it will sell off assets or take out loans that would make the company less financially attractive. |
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Term
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Definition
| When a corp. is faced with the prospect of being taken over and the board of directors wants to resist the takeover attempt, it will make an offer to acquire stock from its own stockholders and thus retain control in order to prevent a takeover. |
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Term
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Definition
| Transaction in which one corp. acquires all of the outstanding shares of one or more classes of stock of another corporation. Both corporations continue to exist as separate entities. |
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Term
| Shareholder (also called a stockholder) |
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Definition
| Party owning an interest in a corp. that has limited right to manage. |
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Term
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Definition
| When a corp. is faced with the prospect of being taken over and the board of directors wants to resist the takeover attempt, it will amend the articled or incorporation or bylaws to make a takeover more difficult. |
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Term
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Definition
| Merger whereby a parent corporation owning 90% or more of a subsidiary corporation may merge the subsidiary into the parent without the approval of the shareholders of either corporation or the approval of the subsidiary's board. |
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Term
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Definition
| One person owns the business and manages all of its affairs. It is not considered an entity separate from the business. |
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Term
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Definition
| Document filed with the secretary of state, stating that the partnership has expanded or curtailed a partner's authority to enter into transactions on behalf of the partnership. However, the filing of a limitation does not give third parties constructive knowledge of the limitation. |
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Term
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Definition
| A partner listed in a filed statement of partnership authority may effectively deny her authority by filing this with the secretary of state. |
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Term
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Definition
| Dividends in the corporation's "own authorized but unissued shares." |
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Term
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Definition
| Liquidation that involves the process of collecting the corporate or partnership assets, paying the expenses involved, satisfying creditors' claims, and distributing the net assets of the business to the appropriate party. |
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Term
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Definition
| Contracts committing parties to the purchase of stock. |
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Term
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Definition
| Issued shares that are sometimes repurchased by the corp. ("issued but not outstanding"). |
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Term
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Definition
| Unauthorized act. Under RMBCA, a corp. may include a clause in its articles stating the business purpose for which the corp. was formed. A number of states require a purpose clause. If a corp. undertakes business activities outside the clause (or outside the business permitted by statute) it may be challenged by adversely affected parties. |
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Term
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Definition
| Distribution that causes a corp. not be able to pay its debts as they become due in the regular course of business or causes the corporation's total assets would be less than its total liabilities. |
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Term
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Definition
| Shareholders agree among themselves to vote their shares as the majority of signers directs. |
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Term
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Definition
| Agreements of shareholders under which all the shares owned by the parties to the agreements are transferred to a trustee, who votes the shares and distributes the dividends in accordance with the provisions of the voting trust agreement. |
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Term
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Definition
| Stock that has been issued in exchange for property worth less than the par value of the stock (the difference between the par value and the value of the property is deemed to be "water"). |
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Term
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Definition
| When a corporation is faced with the prospect of being taken over and the board of directors wants to resist the takeover attempt, it will find a company that the directors want to merge with. |
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