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169 Cards in this Set

  • Front
  • Back
Equity security:
A security representing ownership interest in an enterprise (often called a share).
Debt Security:
A security representing an obligation of the corporate issuer (which may a bond).
One to whom a debt is owed by a corporation.
Authorized shares:
The number of shares the corp. has the authority to issue according to its articles.
Outstanding shares:
Shares issued by a corporation and held by investors.
Preferred stock:
In a corporation that carries certain rights and privileges.
Par Value:
The lowest price for which stock may be sold.
Watered stock:
Stock issued for less than its par value.
Uncertificated shares:
Stock issued without actual stock certificates.
Transfer agent:
An individual or entity that processes and issues a corporation’s stock certificates.
An individual or entity that maintains a corporation’s list of shareholders.
A document showing ownership of a partial share.
Common stock:
Ordinary stock of a corporation having no special privileges.
The winding up of a business and its affairs.
Cumulative distribution:
Distributions that add up and must be paid once a corp. has funds to do so
Noncumulative distribution:
A distribution that does not accumulate and is lost if it cannot be paid.
Conversion right:
Right to convert preferred stock into some other form of equity security, usually common stock.
Redemption right:
Right to compel a stockholder or a corporation to sell or buy stock back.
Right of corporations to require shareholders to sell stock back to corporation.
Right of shareholder to require corporation to buy stock from shareholder.
Debt security holder:
One to whom a corporate obligation or debt is owed.
Unsecured debt:
Debt for which no collateral is pledged.
Promissory note:
A written agreement by which one party promises to repay money borrowed from another party.
Secured Debt:
Money borrowed by a corporation backed by collateral that can be seized in the event of nonpayment (which may be a bond).
Instrument issued with intent of raising money for an entity.
Mortgage bond:
Document by which real estate is pledged as collateral to secure payment of a debt (also called a mortgage note).
Security agreement:
Document by which personal property is pledged as collateral to secure payment of a debt.
Financing statement:
Document filed with secretary of state to provide notice of a security interest.
Redemption terms:
Terms relating to a borrower’s right to pay off or redeem debts prior to its maturity date.
Conversion terms:
Right of a lender to convert a debt security to an equity security.
Process of making one obligation senior to others.
Process of making one obligation junior to others.
Double taxation:
Taxation of corporate income at two levels, once when earned by corporation and then again when distributed to shareholders.
Accumulated earnings:
Tax penalty imposed on corporations that retain earnings beyond reasonable business needs.
Franchise fee:
fee imposed on business for privilege of doing business in a state.
Thin income:
A corporation whose debts are disproportionately high to its equity.
An owner of a corporation also called stockholder.
Straight voting:
Voting in which each share of record has one vote.
Cumulative voting:
Method of voting in election for directors in which each share carries as many votes as there are directors being elected.
Annual meeting:
Yearly meeting of shareholders.
Special meeting:
A meeting held between regular or annual meetings.
Record date:
A date selected in advance of a meeting or event.
The minimum number of shareholders or directors required to be present before action can be taken.
Written authorization from one directing another to vote his shares.
The number of votes received by one in an election when the candidate does not have a majority of votes.
Voting agreement:
An agreement among shareholders specifying how they will vote.
Written record of events occurring at a meeting.
Staggered system:
A method of corporate governance in which not all directors are elected at the same time or in the same election.
Those who manage a corporation.
Commingling of assets:
Combining funds owned by different individuals or entities.
Alter Ego:
Doctrine alleging separate corporate existence has been ignored by shareholders.
Piercing the veil:
Holding individual shareholders liable for corporate obligations.
Derivative action:
Action initiated to enforce a right owned by another.
Direct action:
Action initiated to address direct harm done to the complainant.
A notation marked on a stock certificate indicating the stock is subject to some restriction of limitation.
Buy-sell agreement:
Agreement among shareholders regarding their rights to purchase and sell stock in a corporation and usually imposing some restriction on those rights.
Written consent:
A document reflecting action taken by an agreement in writing, rather than action taken in person or at a meeting; generally, it must be unanimous.
individual who presides at corporate meetings.
Chief financial officer:
Individual with primary responsibility for all financial matters.
Chief executive officer:
individual who supervises other officers.
Individuals appointed by directors to carry out various corporate activities.
Independent director:
Director with no business or family relationships with corporation or its managers.
Governance guidelines:
Formal written policies relating to management of corporations.
Reimbursing another for injury sustained by the other; “holding one harmless” from allegations against the person.
D & O insurance:
Insurance procured to protect directors and officers from claims and lawsuits.
Business judgment rule:
Rule immunizing directors and officers for action taken so long as they acted in good faith.
Actual authority:
Express authority or direction given by one to another.
Apparent authority:
Authority that one believes another to possess due to the other’s conduct or position.
Inherent authority:
Authority that naturally flows from one’s position.
Reverse stock split:
reduction of outstanding shares.
Illegal dividends:
Distributions paid when corporation is insolvent or from unauthorized accounts.
Status of a shareholder without the right to receive a declared dividend.
Surplus account:
Value of a corporation’s net assets that is greater than its stated capital.
Retained earnings:
Net profits accumulated by a corporation.
Excess assets test:
test to determine if dividends can e paid in which equity exceeds liabilities (also called balance sheet test)
State of being able to pay debts as they come due.
Equity insolvency test:
Test to determine if dividends may be paid in which corporation must be solvent.
Share dividend:
Distribution by a corporation of its own shares.
Property dividend:
Distribution of some form of property by a corporation.
Cash dividend:
Cash distribution made by corporation.
Liquidation distribution:
Distribution made to shareholders when corporation liquidates (also called dissolution distribution).
Used strictly to refer to a distribution of a corporation’s profits to its shareholders; used loosely to refer to any type of payment made to shareholders.
Used strictly to refer to payments to shareholders that are not a sharing of profits; used loosely to refer to any type of payment to shareholders.
Stock split:
Division of outstanding shares.
exchange of cash for shares.
Treasury stock:
Stock reacquired by a corporation that is considered issued by not outstanding.
Articles of amendment:
Documents filed with the state that amends articles of incorporation.
Appraisal right:
Right of dissenting shareholder to have shares purchased at their fair value.
Dissenting shareholders:
Shareholders who vote against merger or some other transaction.
Small-scale merger:
Merger involving little transfer of survivor’s stock to incoming shareholders.
Short-form merger:
merger of a subsidiary into a parent.
Corporation formed by another; called the parent.
Plan of merger:
Document setting forth terms of planned merger.
Letter of intent:
Initial document setting forth basic understanding of parties to a transaction.
Cross-species merger:
Merger between corporations and some other business entity.
Combination of two or more corporations into one new entity.
Corporation that survives a merger.
Extinguished corporation:
Corporation that does not survive a merger.
Combination of two or more corporations into one corporate entity.
Party involved in a merger or other similar transaction.
Restated articles:
Articles compiled into one readable form with not changes made.
Articles of merger:
Document filed with state to effect merger.
Suicide Pact:
Agreement by corporate managers to resign en masse after a takeover if any are fired.
Crown jewel defense:
Sale of corporate assets by a target to make itself less attractive to an acquirer.
Poison Pill:
An anti-takeover measure triggered by a tender offer at which time the target’s shareholders are given additional rights. (also called shareholder rights plan)
Golden parachute:
Highly favorable financial packages awarded to senior managers in event of a takeover.
Takeover defenses:
Strategies implemented by target to thwart a takeover.
Proxy contest:
Competition between corporate management and an aggressor to take over board of directors (also called proxy fight).
Williams Act:
Federal law regulating tender offers and takeovers.
Acquisition of up to 4.9 percent of a target’s stock (also called a toehold).
Hostile takeover:
Transaction pursued by bidder without support of target’s management.
Tender offer:
Public offer made by a bidder to acquire shares in a target corporation.
Stock purchase:
Purchase of shares of a corporation.
Asset purchase:
Purchase of assets of an entity.
An entity that is the subject of an acquisition or takeover.
Share exchange:
Exchange of the target’s shares for shares in the acquiring corporation.
Hart-Scot Rodino Act:
Federal statute requiring notification to government before mergers involving certain amounts of parties.
Due Diligence:
Careful review of documents and transactions to ensure they are appropriate for a party and in compliance with all pertinent laws.
Articles of dissolution:
Final document file with state effecting termination of an entity
Foreign Corporation:
Corporation doing business in a state other than the state in which it was formed.
Process of canceling authority to do business in a foreign state.
Certificate of good standing:
Document issued by a state of incorporation verifying corporation is in compliance with state requirements.
Qualifying to transact business:
Process of seeking permission from foreign jurisdiction to do business therein.
Transacting business:
Generally, statutory list of activities in which a corporation may engage in a foreign state without being required to qualify to do business therein.
Action by a state withdrawing a foreign corporation’s authority to do business in that state.
Domestic Corporation:
Corporation doing business in the state in which it was formed.
Voluntary dissolution:
Dissolution initiated by a corporation’s directors or shareholders.
Notice of intent to dissolve:
Document filed with state indicating corporation’s intent to dissolve.
Involuntary dissolution:
Dissolution against the will of a corporation, initiated by state, shareholders, or creditors (also called judicial dissolution).
Judicial dissolution:
Dissolution brought before court (also called involuntary dissolution)
Termination of the legal status of an entity.
Administrative dissolution:
Dissolution initiated for technical or administrative defaults, such as failing to file reports or pay taxes.
Liquidation distribution:
Distribution to shareholders in liquidation process.
Unknown claim:
Claim that has not yet been made against an entity.
Known claim:
A claim known by an entity.
One appointed by a court to oversee liquidation (also called liquidator).
Judicial liquidation:
Process of winding up by court appointee.
Nonjudicial liquidation:
Process of winding up by managers of a business entity.
Process of collecting assts, paying debts, and distributing remains to business owners (also called winding up)
Process of reviving a corporation dissolved for administrative reasons.
Close Corporation:
Corporation whose shares are held by a small group that is active in managing the corporation (also called: closely held corporations or statutory close corporation)
1933 Act:
Act requiring registration before issuance of securities through interstate commerce.
Securities and Exchange Commission; federal agency charged with regulation of securities.
S Corporation:
Corporation whose income is not taxed at corporate level but is passed through to its shareholders who pay taxes at their own rates.
Professional Corporation:
The incorporation of the practice of a professional, such as a lawyer or doctor (also called professional association).
Corporations with common parents (also called brother-sister corporations.
Wholly owned subsidiary:
A corporation the stock of which is entirely owned by the parent.
A corporation formed by another.
A corporation that forms another.
What is offered by nonprofit corporations to their “owners”, rather than stock.
Mutual Benefit Corporation:
Corporation formed for the benefit of its members.
Religious Corporation:
Corporation formed for religious purposes.
Public Benefit Corporation:
Corporation formed primarily for charitable purposes.
Nonprofit Corporation:
Corporation formed for a purpose other than to earn a profit (also called not-for-profit Corporation.
Buy-sell agreement:
Agreement among shareholders regarding transfer of shares.
1934 Act:
Act governing resale of securities after their initial issuance.
Averages that track movements of stock.
Over-the-counter market:
Sale of stock through computerized trading systems, rather than through a securities exchange.
Pink sheet stocks:
Stocks of companies that are not sold through an exchange.
Blue Chip Company:
Reference to nationally known and well-established company.
Big board:
Reference to New York Stock Exchange.
Stock exchange:
Marketplace where securities are traded.
Blue Sky laws:
State laws regulating issuance of securities within a state.
Short-swing profits:
Profits made by certain corporate insiders within six months and which must be disgorged.
Insider trading:
trading in stock by corporate insiders with information unknown to public at large.
Form 8-K:
Form 10-Q:
Form 10-K:
Form filed with SEC to report changes in certain companies.

Quarterly report filed with SEC by certain companies.

Annual report filed with SEC by certain companies.
SEC’s electronic filing system.
Initial Public Offering:
The first offering of stock to the public (an IPO)
Going Public:
Sale of shares to the public at large.