10/30/07: St. John's; Law-1310-0; Sabino; Midterm

Front 1

historical order of businesses

Back 1

1. sole proprietorship
2. partnership
3. corporation

Front 2

what makes a corporation different from sole proprietorships and partnerships in terms of liabilities?

Back 2

sole proprietorships and partnerships have personal liability to their debts.... corporations have limited liability because shareholders are limited to how much they invested, nothing more

Front 3

what makes a corporation different from sole proprietorships and partnerships in terms of transfering ownership?

Back 3

hard to transfer ownership in sole proprietorship and partnership.... easy in a corporation (simple transfer from the shareholders to the ownership)

Front 4

TRUE or FALSE: Corporations are an artificial entity; a legal fiction

Back 4

TRUE

Front 5

TRUE or FALSE: Corporate law is federal law

Back 5

FALSE, it is state law

Front 6

BCL (business corperations law)

Back 6

the new york law to tell u how to start a corperation and how to run it

Front 7

what paperwork do u need to take your business and turn it into a corporation? (3 pieces)

Back 7

-corperate charter
-corperate by-laws
-articles of incorporation

Front 8

2 steps in getting a corporate charter

Back 8

-you write up your own corperate charter, under your states laws
-you write a check and you send your charter to the state

Front 9

corporate by-laws

Back 9

a document that you make to tell us, as the owners of the stock, where to meet, how to meet, etc

Front 10

articles of incorporation

Back 10

fine guidelines that the corporation makes... how many shares, your place of business, who can sue you, etc

Front 11

2 parts of the corporate charter

Back 11

-corporations general powers
-corporations specific powers

Front 12

corporations general powers

Back 12

any general powers that a business needs in order for it to run (ex: firing employees, opening a bank account, etc)

Front 13

corporations specific powers

Back 13

more specific powers having to do with the opporations of the corperation

Front 14

TRUE or FALSE: When a corporation wants to change its laws, it CANNOT ammend the corporate charter

Back 14

-FALSE, it can ammend it

Front 15

ultra vires

Back 15

literally, beyond [its] life.... this is a bad thing because it means a corporation does things that are not in its charter

Front 16

How do you kill a corporation?

Back 16

revoke the charter

Front 17

incorporating a business

Back 17

making your business into a corporation

Front 18

Where and how many times can you incorporate a business?

Back 18

can only be incorperated in 1 state, 1 time

Front 19

domestic corporation

Back 19

a corporation in its own state

Front 20

TRUE or FALSE: When the term foreign corporation is used, it refers to a corporation in a foreign country

Back 20

FALSE, it refers to a corporation in another state

Front 21

DBA (doing business as)

Back 21

a simple way to document for the public record that a corporation is commin from another state (the ppl can sue them easier if necessary)

Front 22

piercing the corporate wall

Back 22

the owner of a corperation breaks down his wall of protection from creditors by stealing from his own company

Front 23

Why can you name a corporation anything you want?

Back 23

this is because of limited liabilities.... the shareholder and owners dont have to give there names because they have limited liabilities

Front 24

3 types of stocks

Back 24

-common stock
-preferred stock
-cumulative preffered stock

Front 25

common stock

Back 25

the most basic bundle of legal rights (im an owner of the corperation, i can legally choose how it is run, and i have the rights to the profits)

Front 26

preferred stock

Back 26

has more legal rights then common stock (i get to share in the profits first and i am first to the dividends)

Front 27

dividend

Back 27

the profit of a corperation (broken up and sent to shareholders)

Front 28

cumulative preferred stock

Back 28

preferred stock that accumulates profits... no matter what happens, no matter how long, u get paid first (more and more and more every single year)

Front 29

stock options

Back 29

legal rights to buy a specific number of shares at a specific price on a specific date in the future....(this is specific to ppl that work in the company itself) (when we actually buy that stock on that future date, we call that exercising your options)

Front 30

stock subscriptions

Back 30

legal agreement for u to pay money today and when there is stock, they give it to u

Front 31

initial public offering (IPO)

Back 31

the legally event where stock is offered to the public for the first time

Front 32

stock buyback

Back 32

when a corporation buys back stock from shareholders

Front 33

treasury stock

Back 33

stock that u (a corporation) buy back and stick it in a vault

Front 34

stock dividends

Back 34

given when there is no cash to give out.... companies will give them stocks instead

Front 35

stock split

Back 35

when a company splits stock in half becuase the price of one stock is too high

Front 36

8 rights of shareholders

Back 36

-to inspect the books
-to select CPAS to review financial statements
-to decide the compensation for executives
-to elect directors
-to have a shareholder meeting whenever
-to have notice of a shareholder meeting
-to vote on extraordinary matters affecting the corporation
-one share = one vote

Front 37

annual report

Back 37

one a year, summary of books and records, financial statements of corporations status

Front 38

how often do CPAs change?

Back 38

every 7 years

Front 39

what are 2 things that a notice of a shareholder meeting should have?

Back 39

-notice given at a point in time well in advance
-ballet with the notice for voting

Front 40

How do shareholders vote in a shareholder meeting

Back 40

-if there are no guidelines specificed, they can put in the vote anyway they want

Front 41

Fiduciary Duty

Back 41

a basic concept that means that you have a basic job of taking care of something that belongs to someone else.... ur job is to make it better.. make it grow

Front 42

business judgement rule

Back 42

a presumption that all business managers make a business decision in good faith

Front 43

TRUE or FALSE: When exercising the business judgement rule, we analyze the misakes that the officer makes, not the process or the intention

Back 43

FALSE, we analyze the intention and process that the officer makes to see if its in good will (if you are doing dilgence)

Front 44

do dilgence

Back 44

checking up on the credibility of a business and showing that your practicing good will

Front 45

not doing dilgence

Back 45

making stupid decisions (the business judgement rule crushes you)

Front 46

3 ways to close a corporation

Back 46

-voluntary dissolution
-involuntary dissolution by the state attorny general
-involuntary dissolution by court order

Front 47

voluntary dissolution

Back 47

voluntary dissolvement of a corperation

Front 48

involuntary dissolution by the state attorny general

Back 48

when the state attorny dissolves the corperation because it is breaking the law

Front 49

involuntary dissolution by court order

Back 49

a minority shareholder who is oppressed by a majority shareholder so the court dissolves the corporation