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