Corporate Law Jargons - Part 4 Flashcards
(26 cards)
Keyman Insurance
A life insurance policy taken out by a business on the life of a key employee or executive whose loss would have a significant adverse impact on the business.
Bridge Loan
A short-term financing arrangement intended to cover immediate obligations while long-term funding is secured, commonly used in M&A and real estate transactions.
Negative Control
The power to block corporate decisions without having affirmative control, often achieved by holding a minority stake with veto rights over key matters.
Turnaround Strategy
A systematic plan implemented by a company to reverse periods of decline or underperformance, often involving restructuring, cost-cutting, or management change.
Shadow Director
A person who is not formally appointed as a director but whose instructions are routinely followed by the actual board, thereby assuming certain legal liabilities.
Waterfall Distribution
A structured method for distributing returns or profits among stakeholders, often used in private equity and venture capital based on predetermined priorities.
Deed of Adherence
A legal document allowing new parties to join existing agreements (especially shareholders’ agreements) and bind themselves to its terms.
Cross-Collateralization
A lending arrangement in which one asset is used as collateral for multiple loans, or multiple assets secure a single loan, increasing lender security.
Dilution Clause
A contractual term protecting investors from a reduction in ownership percentage due to future issuance of shares, often found in venture capital agreements.
Step-In Rights
Rights granted to lenders or third parties to assume control of a project or contractual position in the event of default or non-performance by the original party.
Successor Liability
The legal doctrine holding that a company acquiring another may be liable for the obligations and liabilities of the predecessor under certain conditions.
Cross-Default Provision
A clause in loan or bond agreements stating that a default on one obligation triggers a default on another, safeguarding creditors across multiple instruments.
Exculpation Clause
A contractual provision that limits or absolves a party from liability for certain actions, often found in trust agreements or corporate bylaws.
Non-Disturbance Agreement
An arrangement in commercial leasing that protects the rights of tenants in the event of foreclosure or sale of the leased property.
Holdover Tenant
A lessee who remains in possession of leased premises after the lease term has expired, potentially converting into a tenancy at sufferance or at will based on the landlord’s actions.
Inducement Payment
A financial incentive offered to influence a party to enter into a contract or transaction, often subject to scrutiny under anti-bribery and corporate governance norms
Shotgun Clause
A buy-sell agreement mechanism where one shareholder offers to buy out the other at a specified price, and the recipient must either accept the offer or buy out the offeror at the same price.
Revolving Credit Facility
A flexible line of credit extended by a financial institution that allows the borrower to draw down, repay, and redraw funds up to a specified limit during the term.
Reputational Risk
The potential loss a business may suffer due to damage to its reputation, often resulting from legal disputes, regulatory non-compliance, or public backlash.
Cost Overrun
The excess amount by which actual project costs exceed the budgeted or estimated amounts, commonly addressed in construction and infrastructure contracts.
Exit Rights
Provisions in investment or shareholder agreements allowing an investor or founder to exit their position under predefined conditions, such as IPO, buyout, or third-party sale.
Exit Rights
Provisions in investment or shareholder agreements allowing an investor or founder to exit their position under predefined conditions, such as IPO, buyout, or third-party sale.
Reinstatement Value Clause
An insurance term specifying that the insured will be compensated based on the cost of replacing damaged property without deduction for depreciation.
Sandbagging Clause
A term in M&A agreements allowing a buyer to claim indemnity for breaches of representations and warranties, even if the buyer knew of the breach before closing.
