Chapter 39

A legal entity created and recognized by state law. This business entity can have one or more owners (called shareholders), and it operates under a name distinct form the names of its owners. Both individuals and other businesses can be shareholders.

When a corporation earns profits, it can pass them on to shareholders in the form of ...

When a corporation earns profits, it can retain them as profits. These, if invested properly, will yield higher corporate profits in the future. In theory, higher profits will cause the price of the company's stock to rise.

This is a company whose business activity consists of holding shares in another company. Typically, they're established in a low-tax or no-tax offshore jurisdiction.

When the corporation's home state is the same state in which it does business.

A corporation formed in one state but doing business in another is referred to in the second state as a ... ...

A corporation formed in another country but doing business in the United States is referrred to in the United States as an ... ...

This is a corporation formed by the government to meet some political or governmental purpose. Cities and towns that incorporate are common examples. In addition, many federal government organizations, such as the U.S. Postal Service, are this.

This is any corporation whose shares are publicly traded in a securities market, such as the NASDAQ.

This is a corporation whose shares are held by relatively few persons, often members of a family. Because the number of shareholders is so small, there is no trading market for the shares. In practice, this corporation is often operated like a partnership.

One way the close corporation can effect restrictions on transferability is by spelling them out in a ... .... This can provide for proportional control when one of the original sharheolders dies. The decendent's shares of stock in the corporation can be divided in such a way that the proportionate holdings of the survivors, and thus their proportionate control, will be maintained.

This status election of corporation can avoid the imposition of income taxes at the corporate level while retaining many of the advantages of a corporation, particularly limited liability. The most important requirements for this status are:
1. Must be a domestic corporation
2. Must not be a member of an affiliated group of corporations
3. Shareholders must be individuals, estates, or certain trusts and tax-exempt organizations
4. Must have no more than one hundred shareholders
5. Must have only one class of stock, although similar voting rights among shareholders is not required
6. No shareholder may be a nonresident alien

This is a for-profit corporation that seeks to have a material positive impact on society and the environment. They differ from traditional corporations in the following ways:
1. Purpose (not creating long-term wealth for shareholders)
2. Accountability (shareholders may have a right of private action, enabling them to sue if the corporation fails to pursue public benefit)
3. Transparency (must issue an annual report on its overall social and environmental performance)

The primary document needed to incorporate a business is this. They include basic information about the corporation and serve as a primary source of authority for its future organization and business functions. Generally, they must include the following information:
1. Name of the corporation
2. Number of shares of stock the corporation is authorized to issue
3. Name and street address of the corporation's initial registered agent and registered office
4. The name and address of each incorporator

The internal riles of management for the corporation. These cannot conflict with the state corporation statute or the articles of incorporation. Shareholders and board of directors (unless prohibited by state statute or articles of incorporation) may amend or repeal the ....

This translates to "beyond the power". In corporate law, acts of a corporation that are beyond its express or implied powers are ... ... acts.

Now, because the articles of incorporation of most private corporations do not state a specific purpose, the ... ... doctrine has declined in importance.

In situations where the owners use a corporate entity to perpetrate a fraud, circumvent the law, or in some other way accomplish an illegitimate objective, the courts will ignore the corporate structure by doing this.

When corporate interest and personal interest are mixed together, to such an extent that the corporation has no separate identity.

Stocks and bonds which evidence an ownership interest in a corporation or a promise of repaymeny of debt by a corporation

Debt securities, which represent the borrowing of funds. They are issued by business firms and by governments at all levels as evidence of funds they are borrowing from investors.

They usually have a designated maturity date - the date when the principal of the ... is returned to the ...holder. The ...holders also receive fixed-dollar interest payments, usually semiannually, during the period of time prior to maturity.

Equity securities that represent the purchase of ownership in the business firm. They come in common and preferred.

This provides an interest in the corporation with regard to (1) control, (2) earnings, and (3) net assets. These come with voting rights - one vote per share held. Holders of this assume a residual position in the overall financial structure of a business - they are last in line for receiving payment for their investments.

An equity security with preferences. This means that holders have priority over holders of other stock types as to dividends and payment on dissolution of the corporation. The preferences must be stated in the articles of incorporation. Holders may or may not have the right to vote. Holders may receive fixed dividends periodically.

This is capital provided to new businesses by professional, outside investors (usually groups of wealthy investors and securities firms). New businesses typically give up a share of their ownership to the investors. They also typically give some control over the new company's decisions to the investors.

When private equity firms pool funds from wealthy investors and use it to invest in existing corporations. Usually, they'll buy an entire corporation and then reorganize it. Sometimes, divisions of the purchased company are sold off to pay down debt.

This is a cooperative activity in which people network and pool funds and other resources via the Internet to assist a cause or invest in a venture. Sometimes, it is used to raise funding for charitable purposes.