Business Law

Front 1

dividend

Back 1

a distribution to corporate shareholders of corporate profits or income, disbursed in proportion to the number of shares held

Front 2

retained earnings

Back 2

the portion of a corporation's profits that has not been paid out as dividends to shareholders

Front 3

corporate charter

Back 3

the document issued by a state agency or authority (usually the secretary of state) that grants a corporation legal existence and the right to function

Front 4

articles of incorporation

Back 4

the document filed with the appropriate government agency, usually the secretary of state, when a business is incorporated. State statutes usually prescribe what kind of information must be contained in the articles of incorporation

Front 5

bylaws

Back 5

a set of governing rules adopted by a corporation or other association

Front 6

close corporation

Back 6

a corporation whose shareholders are limited to a small group of persons. The rights of shareholder of a close corporation usually are restricted regarding the transfer of shares to others

Front 7

S corporation

Back 7

a close business corporation that has met certain requirements as set out by the Internal Revenue Code and thus qualifies for special income tax treatment

Front 8

domestic corporation

Back 8

in a given state, a corporation that does business in, and is organized under the law of, that state

Front 9

foreign corporation

Back 9

in a given state, a corporation that does business in the state without being incorporated therein

Front 10

alien corporation

Back 10

a designation in the US for a corporation formed in another country but doing business in the US

Front 11

promoter

Back 11

a person who takes the preliminary steps in organizing a corporation, including (usually) issuing a prospectus, procuring stock subscriptions, making contract purchases, securing a corporate charter, and the like

Front 12

prospectus

Back 12

a document required by federal or state securities laws that describes the financial operations of the corporation, thus allowing investors to make informed decisions

Front 13

quorum

Back 13

the number of members of a decision-making body that must be present before business may be transacted

Front 14

tender offer

Back 14

an offer to purchase shares made by one company directly to the shareholders of another (target) company; often referred to as a "takeover bid"

Front 15

business judgement rule

Back 15

a rule that immunizes corporate management from liability for actions that result in corporate losses or damages if the actions are undertaken in good faith and are within both the power of the corporation and the authority of management to make

Front 16

proxy

Back 16

in corporation law, a written agreement between a stockholder and another under which the stock the stockholder authorizes the other to vote the stockholder's shares in a certain manner

Front 17

stock certificate

Back 17

a certificate issued by a corporation evidencing the ownership of a specified number of shares in the corporation

Front 18

preemptive rights

Back 18

rights held by shareholders that entitle them to purchase newly issued shares of a corporation's stock, equal in percentage to shares currently held, before the stock is offered to any outside buyers. Preemptive rights enable shareholders to maintain their proportionate ownership and voice in the corporation

Front 19

right of first refusal

Back 19

the right to purchase personal or real property-such as corporate shares or real estate- before the property is offered to sale to others

Front 20

receiver

Back 20

in a corporate dissolution, a court-appointed person who winds up corporate affairs and liquidates corporate assets

Front 21

shareholder's derivative suit

Back 21

a suit brought by a shareholder to enforce a corporate cause of action against a third party

Front 22

merger

Back 22

a contractual and statutory process in which one corporation (the surviving corporation) acquires all of the assets and liabilities of another corporation (the merged corporation). The shareholders of the merged corporation receive either payment for their shares or shares in the surviving corporation

Front 23

chose in action

Back 23

a right that can be enforced in court to recover a debt or to obtain damages

Front 24

consolidation

Back 24

a contractual and statutory process in which two or more corporations join to become a completely new corporation. The original corporations cease to exist, and the new corporation acquires all their assets and liabilities

Front 25

appraisal rights

Back 25

the rights of dissenting shareholders, if they object to an extraodinary transaction of the corporation (such as a merger or a consolidation), to have their shares appraised and to be paid the fair value of their shares by the corporation

Front 26

target corporation

Back 26

the corporation to be acquired in a corporate takeover; a corporation to whose shareholders a tender offer is submitted

Front 27

dissolution

Back 27

the formal disbanding of a partnership or a corporation. Dissolution of a corporation can take place by (1)an act of the state legislature, (2)aggreement of the shareholder and the board of directors, (3) the expiration of a time period stated in the certificate of incorporation, or (4)court order

Front 28

liquidation

Back 28

in regard to corporations, the process by which corporate assets are converted to cash and distributed among creditors and shareholders according to specific rules of preference