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Business Law > Test4 > Flashcards

Test4 Flashcards

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1
Q

Corporation

A

Have to file with the state, and it is a creature of state statue. It owned by shareholders, governed by the board of directors and ran executives.

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2
Q

Directors (Corporation)

A

They are elected by the share holders, and the are the one’s that hire the executives and vote them into there role. They have to meet once a year typically they will meet more often than that.

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3
Q

Shareholders ( Corporation)

A

The own the corporation in proportion to the amount of shares they own. More share more control and more votes you get in decision making. They also have limited liability.

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4
Q

Corporate Constitutional Rights

A

Since they are not a real person they do not get the benefits to plead the 5th or protection of the Privileges and Immunities Clause.

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5
Q

Corporate Liability

A

The corporation is protected unless they pierce the corporate veil. and how you do that is paying bills out of your own personal banking account.

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6
Q

Share holders liability (Corporation)

A

Share holders are only liable up to there on personal capital investment

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7
Q

Corporate Taxation

A

They are double taxed, the corporation is taxed and the shareholders pay taxes on dividends.

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8
Q

Dividends

A

Is what shareholders get if the directors decide that they want to pay out, and you receive dividends in proportion to the amount of shares you own.

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9
Q

Retained Earnings

A

corporate profits not distributed to share holders.

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10
Q

Criminal Liability

A

A corporation may be liable for Criminal acts of its agents or employers, as long as the criminal sanctions can be applied to the corporation.

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11
Q

Domestic Corporation

A

A corporation that is established in one state and does business in that same state.

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12
Q

Foreign Corporation

A

A company is established in one state but does business in another.
EX:If eric goes to Louisiana and his business is from Texas because they are not from that state they are foreign.

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13
Q

Alien Corporation

A

A corporation doing business in a given state, but doing business in a foreign country.

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14
Q

Foreign and Alien corporations do not have the right to do business in a state other than the one in which they are incorporated. The may be required to obtain a certificate of authority from any other state in which they want to do business. (true of false)

A

True

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15
Q

Any particular business doing business in several different area’s including the one they are incorporated they are not foreign in any of the countries as long as they are doing business in there own state.

A

False!! they are non foreign or alien in the country they are incorporated in but every other state or country they do business in they are.

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16
Q

Privately held Corporation

A

They are owned and ran by individual and other private interests. You cannot by stock unless you have permission.

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17
Q

Publicly held corporation

A

The general public can buy the stocks and they are traded publicly. This is what most corporations are.

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18
Q

Public Corporation

A

This is like your hospitals, and post offices. They have a public purpose to serve.

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19
Q

Non-Profit Corporation

A

A corporation with a goal of not making profit for the cooperation. When you file though it has to start out as a regular corporation then another formed has to be filed for non profit.

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20
Q

Close Corporations

A

This corporation is privately held and can be ran like a partnership and has very limited share holders.

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21
Q

Management for Close Corporations

A

This can be operated like a sole proprietorship or partnership, with one or a few of the firm’s owners also holding positions as officers and directors.
meaning they do not have to fallow with the shareholders meetings and the board of directors

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22
Q

Transfer Restrictions (Close Corporations)

A

You have restrictions on how you can sell stock if you want to sell.
Ex: if Eric wants to sell his stock and is in a closed corporation with Rebecca and Sierra he has to ask them first if they want that stock before he can offer it to anyone else.

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23
Q

S corporation

A

Which comes from the IRS and you still file with the C-Corp then go to the IRS. They are very similar to LLC’s they have limited liability shield, and pass through taxation, but you do pay franchise tax

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24
Q

Stipulations for S corporations

A

Must have fewer than 100 shareholders.
Must only have one class of stock.
Must not have any nonresident alien shareholders
No foreign investors

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25
Q

Professional Corporation PC’s

A

Formed bu professionals like lawyers and doctors. in effort to reduce the members exposure to the liability compared to what they would face in a partnership.

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26
Q

State of Incorporation

A

The state in which you establish your corporations.

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27
Q

Corporate Name

A

Your name must end with Corp, inc

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28
Q

Articles of Incorporation

A

This is what starts the corporation, this is what you file with the state to be a corporation.

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29
Q

Incorporator

A

The person who executes the articles of incorporation.

You always have to put the registered office and agent that will receive any legal notice.

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30
Q

Ultra Virus

A

This is when a share holder steps outside of there bounds and can be liable and it removes there shield.

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31
Q

De Jure Corporation

A

A corporation whose articles while containing some technical defect, substantially comply
with the laws of the state corporation.

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32
Q

De Facto Corporation

A

A corporation which, despite some substantive defect in it’s incorporation or continuing status, is recognized to exist, even if its existence is improper or illegal. De facto Status requires.

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33
Q

Piercing the corporate veil.

A

If the corporation is set up to make profit the state can break your veil and say that you are not a corporation so you have to be extremely careful.

34
Q

Corporate Financing

A

In a corporation stocks are required, and you do not have to issue bonds.

35
Q

Bond

A

A debt security that represents borrowing by the cooperation.

36
Q

Stock

A

Represents ownership,

37
Q

Common Stock

A

These are the last to receve dividends. but give you interest in voting and assets, in peroration to the amount you own.

38
Q

Preferred Stock

A

The only difference compared to common stock is that the preferred stock as priority when it comes to dividends and distribution of assets.

39
Q

Venture Capital

A

They may provide a large capital contribution in return for part ownership of the business, they have the right to provide managerial and technical support.

40
Q

Private Equity Capital

A

They gain there wealth from private innovators that are looking to invest in other corporations

41
Q

Merger

A

One of the most common what normally happens is that the one corporation will take over another and that will be the surviving corporation, and then the one being taken over is the merged corporation. And the surviving corporation is the one that keeps the name.

42
Q

Consolidation

A

A contractual a statutory process bu wich 2 companies with two different names come together and create a bran new company and use both names.

43
Q

Share Exchange

A

Exchanging some or all of a corporations shares with another corporation and both companies still remain in business.

44
Q

Procedure for any mergers, Consolidation, and share of exchange

A

Board of directors have to approve it.
They must show how the shares will be worked out for the shareholders.
The share holders of the one being taken over have to approve it.
Then it must be filed correctly and then you finally receive a certificate.

45
Q

Short form merger

A

Where one person own majority of the stock

46
Q

Assets purchase

A

one corp. purchases all the assets of another corp. this does not require shareholders votes.They also consume all of the owners liabilities

47
Q

Appraisal Right

A

Meaning any shareholder who does not agree to any type of take over they have the right to vote no and not be apart of any new corporation and there stocks will be purchased at fair market value.

48
Q

Stock Purchase

A

this normally is done by a tender offer that is made public for all the shareholders to have a chance to sell there stock. This normally is done to have a percentage of control within in the corporation.

49
Q

Crown Jewel Defense

A

Att&t makes a tender offer to T-Mobil, then they will sell off all of there towers because they new At&t wanted them.

50
Q

Golden Parachute

A

If there is a hostile takeover they push out executives but in there contracts the have a golden parachute so they leave with a large sum in there pockets.

51
Q

Poison Pill

A

We see this used the most, that if there is a takeover then they put out more stock for the share holders to buy, they do not function for a very long time.

52
Q

White Night

A

The one company that is about to get bought out that doesn’t necessarily want to be bought by that one company and run to another and ask them to buy them instead.

53
Q

Dissolution

A

This may occur if the share holders vote for it.
The board of directors vote on it and the shareholders agree.
If the directors are fraudulent in any way and the court or the shareholders can order the dissolution.

54
Q

Winding Up

A

This is when assets gets paid out. In order of course creditors come first and the shareholders are last.

55
Q

Stipulations to directors

A

They must be voted in, the are term for removable with reasonable notice, They do not receive salaries, they have just one vote per director. there meetings require Quorum.
They make the decision with dividends.

56
Q

Quorum

A

Minimum number of directors attending.

So if you have 8 directors and your quorum is 50% then you have to have at least four to vote.

57
Q

Officers

A

These are the agents of the directors.

Ex: presidents, ceo’s Vice presidents.

58
Q

Compensation

A

Officers are allowed the opportunity to get paid for what they do but they do not share in the profits. So they receive compensation.

59
Q

Oversight (officers)

A

Is what the officers are subjected to by the board of directors.

60
Q

Agency (officers)

A

Officers are authorized agents of the cooperation.

61
Q

Personal Liability (officers)

A

Officers are generally not liable for the obligations of the corporation

62
Q

Duty of care

A

Everyone is expected to act in good faith, and act in best interest of the company.

63
Q

Business Judgement Rule

A

The directors and officers are not liable for making a bad decision as long as it was reasonable, just because something didn’t work out they are still ok.

64
Q

Duty of Loyalty

A

Directors and officers cannot compete against there corporation. Even though they have inside knowledge you cannot go out and act unlawfully toward the corporation for personal gain or at the gain of another corporation.

65
Q

Conflict of Interest

A

Directors and Officers must state all conflicts of interest if they do not it is illegal. You have to put it in writing and not vote and you are ok and not liable.

66
Q

Separating Ownership and management

A

This is where the shareholders have no responsibility to manage anything. And that shareholder has no special rights they are equal to all other shareholders.

67
Q

Proxy

A

Where a shareholder gives permission to another share holder to vote on there behalf.

68
Q

Straight Voting (Shareholders)

A

Each shareholder may have one vote for one piece of stocks. So more stocks more votes you have.

69
Q

Cumulative Voting

A

If you have three board seats opens and you have 1,00 shares of stock, then you get 3,000 votes but can only vote 1,000 toward one person.

70
Q

Preemptive Right

A

The right that if it is in your contract and one investor is buying up all of your stock and the owner has the opportunity to buy more stock at the same price so that he can keep his same amount of ownership.

71
Q

Failing to declare dividend

A

This normally is a lost cause, board of directors win every time.

72
Q

Inspection Rights (Share Holders)

A

Shareholders are allowed to inspect the corporations books and the records.

73
Q

Transfers of shares

A

Can only be done friendly

74
Q

Corporate Dissolution

A

Shareholders have the rights to assets.

Shareholders have the right to petition the judge for dissolution if the board of directors are being illegal.

75
Q

Shareholder Derivative suit

A

A suit by one or more shareholders on the behalf of the corporation. The cause can be because the board of directors are mishandling assets.

76
Q

Liability of majority Shareholders

A

a shareholders who holds more than 50% of a corporations outstanding stock may owe fiduciary duties to the corporation and to its minority shareholders-particulary when the majority share holder sells his shares, thereby effecting a change in corporate control.

77
Q

Securities exchange act

A

Regulates security exchanges, brokers, dealers and national securities associations, as well as all corporations who’s stock is listed in the stock exchange, who’s assests is more than $10 million and five hundred or more share holders.

78
Q

Rule 10b-5

A

Anything that is a untrue statement, misleading statement is unlawful with making a purchase or sale.

79
Q

Materiality (Securities Fraud)

A

which is misinterpreted facts about a product or service that could lead a person not to buy and enforced by the 10b-5 law

80
Q

Safe Harbor

A

Meaningful cautionary statement accompany the forward-looking statement

81
Q

Liable for 10b-5

A

Anyone who has inside information and doesn’t keep it quiet is liable for the ruble.

Business Law (2 decks)

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