Business Law- Chapter 36

Question 1

Corporation

Answer 1

A fictitious legal entity that is created according to statutory requirements

Question 2

Corporation Codes

Answer 2

State statutes that regulate the formation, operation and dissolution of corporations.

Question 3

Limited Liability of Shareholders

Answer 3

A general rule of corporate law which provides that generally shareholders are liable only to the extent of their capital contributions for the debts and obligations of their corporation and are not personally liable for the debts and obligations of the corporation.

Question 4

Revised Model Business Corporation Act (RMBCA)

Answer 4

A 1984 revision of the MBCA that arranges the provisions of the act more logically, revises the language to be more consistent, and makes substantail changes in the provisions.

Question 5

Private Corporation

Answer 5

A corporation formed to conduct privately owned business.

Question 6

Profit Corporation

Answer 6

A corporation created to conduct a business for profit that can distribute profits to shareholders in the form of dividends.

Question 7

Publically Held Corporation

Answer 7

A corporation that has many shareholders and whos securities are often traded on national stock exchanges.

Question 8

Closely Held Corporation

Answer 8

A corporation owned by one or a few shareholders.

Question 9

Professional Corporation

Answer 9

A corporation formed by lawyers, doctors, and other professionals.

Question 10

Domestic Corporation

Answer 10

A corporation in the state in whcih it was formed.

Question 11

Foreign Corporation

Answer 11

A corporation in any state or jurisdiction orther than the one in which it was formed.

Question 12

Alien Corporation

Answer 12

A corporation that is incorporated in antoehr country.

Question 13

Incorporator

Answer 13

The person or persons, partnerships or corporations that are responsible for incorporation of a corporation.

Question 14

Promoter

Answer 14

A person or persons who organize and start a corporation, negotiate and enter into contracts in advance of its formation, fine the initial investors to finance the corporation and so forth.

Question 15

Promoters’ Contracts

Answer 15

A collective term for such things as leases, sales contracts, contract to purchase property, and employment contracts entered into by promoters on behalf of the proposed corporation prior to its actual incorporation.

Question 16

Articles of Incorporation

Answer 16

The basic governing documents of a corporation. It must be filied with the secretary of state of the state of incorporation.

Question 17

Registered Agent

Answer 17

A person or corporation that is empowered to accept service of process on behalf of a corporation.

Question 18

Bylaws

Answer 18

A detailed set of rules adopted by the board of directors after a corporation is incorporated that contains provisions for manageing the business and the affairs of the corporation.

Question 19

Organizational Meeting

Answer 19

A meeting that must be held by the initial directors of a corporation after the articles of incorporation are filed.

Question 20

Equity Securities

Answer 20

Representation of ownership rights to a corporation.

Question 21

Common Stock

Answer 21

A type of equity security that represents the residual value of a corporation.

Question 22

Common Stockholder

Answer 22

A person who owns common stock

Question 23

Preferred Stock

Answer 23

A type of equity security that is given certain preferences and rights over common stock.

Question 24

Preferred Stockholder

Answer 24

A person who owns preferred stock.

Question 25

Dividend Preference

Answer 25

The right to receive a fixed dividend at stipulated periods during the year.

Question 26

Liquidation Preference

Answer 26

The right to be paid a stated dollar amount if a corporation is dissolved and liquidated.

Question 27

Cumulative Preferred Stock

Answer 27

Stock for which any missed dividend payments must be paid in the future to the preferred shareholders before the common shareholders can receive any dividends.

Question 28

Participating Preferred Stock

Answer 28

Stock that allows the preferred stockholder to participate in the profits of the corporation along with the common stockholders.

Question 29

Converticle Preferred Stock

Answer 29

Stock that permits the preferred stockholders to convert their shares into common stock.

Question 30

Redeemable Preferred Stock

Answer 30

Stock that permits a corporation to buy back the preferred stock at some future date.

Question 31

Authorized Shares

Answer 31

The number of shares provided for in the articles of incorporation.

Question 32

Inssue Shares

Answer 32

Shares that have been sold by a corporation.

Question 33

Debt Securities

Answer 33

Securities that establish a debtor-creditor relationship in which the corporation borrows money from the investor to whom a debt security is issued.

Question 34

Debenture

Answer 34

A long-term unsecured debt instument that is based on a corporation’s general credit standing.

Question 35

Bond

Answer 35

A long-term debt security that is secured by some form of collateral.

Question 36

Note

Answer 36

A debt security with a maturity of five years or less.

Question 37

Indenture Agreement

Answer 37

A contract between a corporation and a holder that contains the terms of a debt security.

Question 38

Express Powers

Answer 38

Powers given to a corporation by the U.S. Constitution, state constitutions, federal statutes, state statutes, articles of incorporation, bylaws and resolutions of the board of directors.

Question 39

Implied Powers

Answer 39

Powers beyond express powers that allow a corporation to accomplish its corporate purpose.

Question 40

Ultra Vires Act

Answer 40

An act by a corporation that is beyond its express is implied powers.

Question 41

Voluntary Dissolution

Answer 41

Dissolution of a corporation that has begun business or issued shares upon recommendation of the board of directors and a majority vote of the shares entitled to vote.

Question 42

Administrative Dissolution

Answer 42

Involuntary dissolution of a corporation that is ordered by the secretary of state if a corporation has failed to comply with certain procedures required by law.

Question 43

Judicial Dissolution

Answer 43

Dissolution of a corporaion through a court proceeding instituted by the state.

Question 44

Winding up and Liquidation

Answer 44

The process by which a dissolved corporation’s assets are collected, liquidated and distributed to creditors, preferred shareholders and common shareholders.