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169 Cards in this Set

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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).
Bondholder:
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.
Registrar:
An individual or entity that maintains a corporation’s list of shareholders.
Scrip:
A document showing ownership of a partial share.
Common stock:
Ordinary stock of a corporation having no special privileges.
Liquidation:
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.
Call:
Right of corporations to require shareholders to sell stock back to corporation.
Put:
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).
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.
Priority:
Process of making one obligation senior to others.
Subordination:
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.
Shareholder:
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.
Quorum:
The minimum number of shareholders or directors required to be present before action can be taken.
Proxy:
Written authorization from one directing another to vote his shares.
Plurality:
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.
Minutes:
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.
Directors:
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.
Legend:
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.
Chair:
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.
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.
Indemnification:
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.
Ex-dividend:
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)
Solvency:
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).
Dividend:
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.
Distribution:
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:
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.
Subsidiary:
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.
Consolidation:
Combination of two or more corporations into one new entity.
Survivor:
Corporation that survives a merger.
Extinguished corporation:
Corporation that does not survive a merger.
Merger:
Combination of two or more corporations into one corporate entity.
Constituent:
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.
Foothold:
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.
Target:
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.
Withdrawal:
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.
Revocation:
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)
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.
Receiver:
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.
Liquidation:
Process of collecting assts, paying debts, and distributing remains to business owners (also called winding up)
Reinstatement:
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.
SEC:
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).
Affiliates:
Corporations with common parents (also called brother-sister corporations.
Wholly owned subsidiary:
A corporation the stock of which is entirely owned by the parent.
Subsidiary:
A corporation formed by another.
Parent:
A corporation that forms another.
Membership:
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.
Indexes:
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.
EDGAR:
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.