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BUSI 4350 > Chapter 9- Business Organizations and Securities Regulation > Flashcards

Chapter 9- Business Organizations and Securities Regulation Flashcards

(61 cards)

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1
Q

Stockholder ( Shareholder)

A

An owner of a corporation

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2
Q

Stock

A

Ownership interest of a shareholder

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3
Q

Publicly held Corporation

A

Publicly traded shares

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4
Q

Corporations

A

Not elected to be taxed as an S corporation
All corporations are C corporations by default

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5
Q

General Partnership

A

All partners are general partners
Mutual agencies

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6
Q

Sole Proprietorships

A

One person owns and controls the business
Legally indistinguishable from the owner

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7
Q

Limited Liability Company

A

A hybrid form of business, general partnership with limited liability and operating advantages as a corporation

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8
Q

S Corporation

A

Closely-held corporation where shareholder have elected to be taxed like partners

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9
Q

Close held corporation

A

Few shareholders, stock not traded on a public market

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10
Q

Board of Directors

A

The body elected by the shareholders to govern the corporation

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11
Q

Bylaws

A

Governs the management and operation of an organization

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12
Q

Directors

A

Elected by shareholders to govern
Have no authority, only as board directors

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13
Q

Fiduciary Duty

A

The responsibility of one in a position of trust with another to act in the best interests

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14
Q

Fiduciary (Beneficduary)

A

Relationship of trust with another and act in their best interests

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15
Q

Business Judgement Rule

A

Protecting business managers from liability for making bad decisions when they have acted in accordance to fiduciary duties with loyalty and due care

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16
Q

Respondent Superior

A

Let the master answer

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17
Q

Indemnify

A

Directly pay the costs of or reimburse the costs incurred by

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18
Q

Piercing the corporate veil

A

Holding the shareholder responsible for acts of a corporation because of the shareholders domination
1- Misuse of the corporate form
2-An unjust result if limited liability is allowed to stand

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19
Q

Buy-sell agreement

A

Required to sell stock to the corporation or shareholder under an event (death)

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20
Q

Liquidated

A

Satisfying all creditors
Distributing assets to shareholders

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21
Q

Article of Dissolution

A

Article filed to the state to dissolve a corporation

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22
Q

Tax Avoidance

A

Minimizing taxes by lawful means

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23
Q

Tax Evasion

A

Minimizing taxes by lawful means

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24
Q

Double Taxation

A

First taxed on income then shareholders are taxed again based on income when its distributed as dividends

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25
Equity Capital
Resources obtained from owners to acquire assets and conduct operations
26
Common Stock
Residual ownership interest in a corporation. Right to participate in control, earnings, and assets upon liquidation
27
Preferred Stock
Enjoy a priority over common stock, with earnings and assets upon liquidation but ack the right to participate in control
28
Debt Capital
Resources obtained from lenders to acquire assets and conduct operations ( short or long term )
29
Bonds
Long-term debt security issued to raise capital for a venture
30
Capital Structures
The balance between debt and equity capital
31
Debt Covenant
Debt immediately payable should the condition cease to be satisfied Ex: Exceeding a specified debt/equity ratio
32
Right of contribution
Reimbursed by other partners for its payment of a disproportionate amount of a partnership obligation
33
Dissociation
Cessation of a person's status as a partner without causing the partnership dissolution
34
Member
An owner of a LLC
35
General Partner
Participates in management and has unlimited liability for partnership obligations
36
Limited Partner
Does not participate in management and enjoys limited liability
37
Venture Capitalists
Those who invest new riskey business venture
38
Franchise
Franchisee can produce, distribute or sell their products using their name
39
Inside/Outside Directors
Inside- Senior Directors Outside- Not employed by company
40
Independent Directors
Outside directors without conflicts of interest
41
Proxy
Written permission from a shareholder to another to vote the share at a stockholders meeting
42
Tender Offer
Public offer to buy common stock at a specified price for a specified period of time
43
Stateless Income
Income purportedly subject to taxation nowhere in the world
44
Interstate/ Intrastate Offering
1- Selling security to persons residing in states other than that in which the issuer incorporated 2- Selling in same state
45
Initial Public Offering (IPO)
Sale for the first time
46
Going Public/Private
1- Selling first equity interest in the public market 2-Private investors buy all of the equity securities of a publicly held cooperation
47
Securities and Exchange Commission (SEC)
Federal regulatory agency created in 1934 that is responsible for overseeing the securities market
48
Prospectus
Offering a security for sale and summarizing the information needed for a prospective buyer to evaluate it
49
Solicitation
Offering to sell a security
50
Tombstone Ad
Securities advertisement that does not constitute an offer to sell but rather informs the public that the security might be offered for sale in the future
51
Red Herring
Draft securities prospectus included in the registration statement filed with the SEC Doesn't constitute an offer to sell the security
52
Shelf Registration
Permits issuer to hold securities for sale until favorable market conditions emerge or the issuer needs the proceeds
53
Underwriter
Best Sales: Finance professional who acts as the issuers sales agent in a securities offering Firm Commitment: Buys securities from the issuer hoping to profit from their resale to the public
54
Over the counter market
A computer network linking dealers to effectuate the purchase and sale of securities
55
Due Diligence
Materially misleading statement or omission in a registration statement. Must demonstrate that a reasonable investigation was undertaken to provide plausible basis Depends on if a defendant is an expert
56
Insider trading
Trading securities while in possession of material nonpublic information in violation of a fiduciary duty Insiders are directors officers and employees
57
Disgorgement
Forfeiture of bad gains
58
Greenmail
Hostile takeover defense involving the target corporations repurchase of a takeover raiders stock at a premium not offered to other shareholders
59
Crow Jewel Defense
Target corporation prearranges to sell critical assets to a friendly third party
60
Poison pill defense
Resist a hostile takeover, prearranging a new issuance of a significant amount of common stock to existing shareholders at a discounted price
61
Golden Parachutes
Generous severance pay packages

BUSI 4350 (10 decks)

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