Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

blaw > ch 18: corps > Flashcards

ch 18: corps Flashcards

(51 cards)

Start Studying
1
Q

what is corp

A

legal entity created and recognized by state law

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

what does corp consist of

A

1 or more owners which are shareholders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

who can be shareholders in corp

A

Individuals and other businesses can be share holders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

is corp considered a person

A

yes- artificial legal person

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

what is true of corp rights since they are a person

A

they are allowed the same rights as ppl such as free speech, freedom of unreasonable searchs, due process

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

The responsibility for mgmt is w

A

the board of D

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

who elects board of d

A

share holders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

who does BOD hire to run daily operations

A

corporate officers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

when an individual purchases stock in a corp, what happens

A

they become a shareholder / owner of the org

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

what is the advantage of limited liability for corp as a shareholder

A

Corp shareholders liability is limited to the amt of their investments

Not liable of the debts of the corp

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

corporate profits n sharing w shareholders

A

When a corp earns profits it can either pass it to shareholders in dividends or retain them as profits (retained earnings) and reinvest this which can gain more profits in the future rising stock price in which shareholders will reap benefits more since itll be more $$ when they sell their stock

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

corp tax disadvantage

A

Corps can be subject to double taxation if profits are passed thru dividends

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Domestic corp

A

term used by state where corp was formed - ex if ulta set up in VA, the VA considers it a domestic corp

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

foreign corp

A

if a corp operates in a diff state, ex if ulta does in texas, then textas views ulta as foreign corp

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

align corp

A

corp formed in another country (ex ulta formed in mexico) but doing BUS in US, it is an align corp

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

do corps have automatic right to do business in other states

A

no, they might need a certificate of authority unless its thru digital.

failing to adhere may result in fines

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Public corp + examples

A

formed by the govt to meet political/govt purpose

AMTRACK, postal servic

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

diff btw public corp vs public company

A

pub company/publicly held corp -shares are publicly traded thru NY stock exchange , etc

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Private corp

A

created either in wholly or in part for private benefit

Most are private

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

non profit corp + examples

A

formed without profit making purpose
-Ex charities, schools, religious orgs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Close corporations who are shares held by?

Study These Flashcards
A

Corp in which shares are held by very few- usually family

22
Q

Since number is so small in close corp there is no trading market for the shares

t or f

23
Q

what is a + for close corps

Study These Flashcards
A

Flexibility in determining their operating rules- for ex if they all agree they can operate without directors

24
Q

Mgmt in close corps + how to avoid giving too much power

Study These Flashcards
A

Mgmt is similar to sole p or partnership in which one shareholder or small group takes on role of directors/officers

To avoid giving power to majority shareholder, close corps require more than simple majority vote for some decisions

25
Transfer of shares dilemma in close corps + how to avoid
Since close corp is alr small, transferring shares could have a major affect on the corp To avoid this, corp could restrict transferring to outside person or require them to offer shares to corp or other shareholders before selling to an outsider
26
Misappropriation of Close Corporation Funds
Maj shareholder might misuse position by taking comp funds for personal benefit - fix this by giving minority shareholders shares valued at fair market price
27
S corp
comp avoids paying taxes at corp level and passes profits to SH to pay inc tax on that (avoids double taxation) Taxed like a partnership
28
Professional corps + types + requirement
Bus formed by professionals such as lawyers which allow them to incorporate their practice while retaining benefits as a corp S.C. (Service Corporation) P.C. (Professional Corporation) P.A. (Professional Association) shareholders must generally be licensed professionals
29
t or f Many states allow businesses to incorporate via the Internet.
t
30
Incorporation procedures (1-4)
1- select state of incorporation 2- secure an appropriate corp name 3- prepare articles of incorporation 4- file articles of incorporation
31
selecting state of inc
Most corp looks at the states that offer the most advantage tax laws, for example delaware bc it has the least restrictive laws and good favor of corporate management
32
select appropriate name
Requires state approval to prevent duplication Crucial to secure a name available as a domain Can not be identical or super similar to an existing corp name
33
3 - prepare articles of incorporation
primary doc needed to incorporate which include basic info abt the corp
34
4 - file it
Once the articles of incorporation have been prepared and signed they are sent to the appropriate state official.
35
Securities
stocks and bonds that represent ownership in corp
36
Bonds and its details
Represents borrowing of funds (evidence of funds borrowed from investors) Have a maturity date in which it has to be returned Details specified in a landing agreement Bondholders also receive fixed-dollar interest payments, usually semiannually, during the period of time before maturity. - For that reason, bonds are sometimes referred to as fixed-income securities
37
Preferred stock advantage
Holders of preferred stock usually have priority over holders of common stock
38
what is true ownership
common stock
39
Piercing the corporate veil
Courts may “perice the corp viel” if the corp is used for illegal purposes in which it exposes shareholders to personal liabilities
40
t or f If a shareholder uses the corporation to evade personal responsibility, resulting in significant injustice, the court may hold the shareholder personally liable for corporate debts.
t
41
t or f BOD = ultimate authority in every corp
t
42
Duties include BOD
selecting/removing corp officers Determining cap structure Declaring dividends
43
t or f One person cannot hold multiple roles and can be an officer and director
f- they can
44
Directors and officers considered fiduciaries t or f
t
45
Duty of care for directors/officers
Standard of due care requires dictors/officers to act in good faith and honestly and do it reasonably Act in a way they consider the best interests for the corp
46
t or f
directors/officers who fail to exercise due care may be held liable for negligence
47
Duty to make informed reasonable decisions
Expected to be informed on corporate matters and conduct a reasonable investigation of the situation before making a decision They must do what is necessary to keep informed such as attending meetings and asking for info from those who have it They cant make decisions without research
48
Business judgment rule
Protects dir/off from liabilities for judgments made in good faith/honest mistakes dir/off must use best judgment in managing a corp
49
When the business judgement rule applies
If the officer took reasonable steps to be informed on the matter Had rational basis for decision Did not have conflict btw personal interests and interests of the corporation
50
Duty of loyalty of dir/off
Requires dir/off to subordinate their personal interests to the welfare of the corp Cannot use corp funds or info for personal advantage
51
Shareholder derivative suit
Idf a 3rd party harms a corp, directors can file lawsuit on corps behalf If directors don’t take action, shareholders can file a shareholder’s derivative suit to pursue the claim on behalf of the corporation

blaw (17 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions