TEST 4: CH 36 Flashcards
(38 cards)
1
Q
Corporation
A
- a fictitious legal entity that is created according to statutory requirements
2
Q
How does a corporation form?
A
- same as lllp
- they have to apply to the secretary of state’s office and ask for charter
- corporate charter allows corporation to exist
3
Q
Shareholders
A
- owners of a corporation who elect the board of directors and vote on fundamental changes in the corporation
- only votes for board of directors
- 50 or less shareholders
- shares not traded or sold separately
4
Q
Board of Directors
A
- if non profit, they are called trustees
- can hire and fire high corporate officers
5
Q
Corporation Codes
A
- state statutes that regulate the formation, operation, and dissolution of corporations
- courts interpret state corporation statutes to decide individual corporate and shareholder disputes
6
Q
True or False: A corporation is a separate legal entity
A
- true
7
Q
True or False: Corporations can not be found civilly and criminally liable for violations of the law.
A
- false, they can be found civilly and criminally liable
8
Q
True or False: Corporations can sue or be sued in their own names.
A
- true
9
Q
Free Transferability of Shares
A
- a characteristic of corporations
- national securities markets have been developed for the organized sale of securities
10
Q
Perpetual Existence
A
- unless a specific duration is stated in a corporation’s articles of incorporation
- can be voluntarily terminated by the shareholders
11
Q
Centralized Management
A
- board of directors makes policy decisions concerning the operation of a corporation
- high corporate officers run the corporation
12
Q
Limited Liability of Shareholders
A
- corporations are liable for their own debts and obligations
13
Q
Public Corporation
A
- a corporation formed to meet a specific governmental or political purpose
14
Q
Municipal Corporations
A
- local government corporations
15
Q
Private Corporations
A
- a corporation formed to conduct privately owned business
16
Q
Profit Corporation
A
- created to conduct a business for profit
- can distribute profits to shareholders in the form of dividends
17
Q
Not-for-profit Corporation
A
- a corporation formed to operate charitable institutions, colleges, universities, and other not-for-profit entities
18
Q
Publicly Held Corporation
A
- many shareholders
- shares traded on organized security markets
- shareholders rarely involved in management
19
Q
Closely Held Corporation
A
- few shareholders
- shareholders may have buy-and-sell agreements
- shareholders often involved in management
20
Q
Professional Corporation
A
- a corporation formed by lawyers, doctors, or other professionals
- shareholders are called members
> not usually liable for torts committed by agents or employees
> may be liable for malpractice of members
21
Q
True or False: The owner of a professional corporation must practice the profession.
A
- true
22
Q
Article of Incorporation
A
- basic governing documents of the corporation
- must be filed with secretary of state of incorporation
- may contain term, purpose, limitation, regulations of affairs
23
Q
Corporate Charter
A
- lasts forever unless secretary of state revokes it
- secretary of state could revoke it for good, bad, or no reason
- secretary of state could revoke the charter at any time
24
Q
Corporate ByLaws
A
- a detailed set of rules adopted by the board directors after the corporation is incorporated
- contains provisions for managing the business and affairs of the corporation
- governs internal management structure
25
Corporate Seal
- a design that contains the name of the corporation and the date of incorporation
26
Organizational Meeting
- must have at least one of these every year
| - a meeting held by the initial directors of the corporation after the articles of incorporation are filed
27
Ultra Vires Act
- an act by a corporation that is beyond its express or implied powers
28
Delaware General Corporation
- attract corporate formations
- more than 50% of publicly traded corporations in America are incorporated in Delaware
- most advanced corporation law in the country
29
Equity Securities (Stocks)
- representation of ownership rights to a corporation
30
Common Stock
- a type of equity security that represents the residual value of a corporation
- no preferences
- no fixed maturity date
31
Par Value Shares
- common stock on which the corporation has set the lowest price
32
No Par Value Shares
- no assigned par value
33
Preferred Stock
- a type of equity security that is given certain preferences and rights over common stock
34
Preferred Stockholder
- a person who owns preferred stock
35
Dividend Preference
- the right to receive a fixed dividend at stipulated periods during the year
36
Liquidation Preference
- the right to be paid a stated dollar amount if a corporation is dissolved and liquidated
37
Winding-Up Liquidation (Stock)
- the process by which a dissolved corporation’s assets are collected, liquidated, and distributed to:
1. creditors
2. shareholders
3. other claimants
38
Termination
- the ending of a corporation that occurs only after the:
1. winding-up
2. liquidation of assets
3. distribution of the proceeds to claimants
