Chapter 21 Vocab - Business Law

Someone who organizes a corporation

Agree to be bound by the terms of a contract

A new contract

A corporation is domestic in the state it was formed

A corp is formed in another state

Corporation
Incorporated
Company
Limited

Delaware accepts: Association and Institute

Someone hired by a business to serve as its official presence in the state

The person who signs the charter and files it with the Secretary of state

Stock that has been authorized, but not yet sold

Stock that has been authorized and sold. "outstanding"

Stock that a company has sold, but later bought back

A category of stock that has different rights from other classes

A subcategory of a class of stock

Owners of preferred stock:

-receive dividends first
-priority liquidation
-No voting rights

Owners are entitled to be paid all dividends before common stock shareholders receive.

Owners of this type of stock lose an annual dividend if the company cannot afford it in the year it is due.

A signed document that takes the place of a shareholders or directors meeting

The official record of a corporation

A document that specifies the organizational rules of an organization, such as the date of the annual meeting and the required number of directors

Failure to observe formalities
Commingling of assets
Inadequate capitalization
Fraud

The percentage of stock that must be represented for a meeting to count

Vote
Filing
Winding up: officers pay debts, distribute assets

Anyone affected by a company's activities

employees, customers, creditor, suppliers, neighbors

An attempt by an outside investor to acquire a company in the face of opposition from the target corp's board of directors

Managers are not liable for decisions they make in good faith: Duty of loyalty and Duty of Care

-Permits directors to do their jobs
-Keeps judges out of corp management
-encourages directors to serve

a manager makes a decision that benefits himself or another company

BOD approves the transaction
Shareholders approve it
transactions was fair to the corp

Shareholders with a large block of stock who seek to influence a company's decisions and strategy

Everyone who owns stock on this date is entitled to vote at the shareholders meeting

-The person whom a shareholder appoints to vote for him at a meeting of the corporation

-The document a shareholder signs

A company provides information to shareholders to aid them in voting their stock

A document with financial information for shareholders

Members of the board of directors who are not employees of the company

A winning candidate must receive the most votes, but not majority

Directors must resign if fewer than half of the shares vote for them

Companies are required to include in their proxy statement the names of board nominees selected by large shareholders

Advise shareholders on how to vote in corporate elections

Only a portion of the directors are elected each year. Thus, replacing the entire board takes some years to accomplish

Members of the board of directors who are also employees of the corporation

If a corp makes a fundamental change, the company must buy back the stock of any shareholders who object to this decision