Chapter 14 Legal 2700

Domestic, foreign

A corporation is known as _________ in the state in which it is incorporated. In all other states it is called a ________ corporation.

General partners

Partners personally liable for the organization's debts

Charter, secretary of state

A corporation is created when a state issues a _________ to the incorporators; _________ ___ _______ looks over filings

Partnership

-Dissolved whenever one partner withdraws -Each partner has equal voice; modified by agreement -Personal obligation for all debts and liabilities; joint and several liability -All business income subject to personal taxation, divided equally

Sole proprietorship

-Easiest and least expensive business organization to create (only need a business license) -Can't transfer ownership -Total control by proprietor -Personal obligation for all debts and liabilities -All business income subject to personal taxation

Corporation

-Incorporators apply for state charter with articles of incorporation -Perpetual, so long as it can conduct business -Managed by officers, appointed by directors -Shareholder obligations limited to investment, absent other commitments -Corporate income taxed; shareholders taxed only on income distributed

S corporation

-Incorporators apply for state charter with articles of incorporation -Perpetual, so long as number of shareholders is limited -Managed by officers, appointed by directors, who are elected by shareholders -Shareholder obligations limited to investment, absent other commitments -All business income subject to personal taxation

Limited liability company or partnership

-Organizers file articles of organization with state official -Dissolved when member withdraws, but may be continued by those remaining -Equal management by members unless manager designated -Members are agents, but liable only for investment -All business income subject to personal taxation

Limited partnership

-Partnership agreement and certificate filed in public office where business is conducted -Dissolved when general partner withdraws -General partners have total control -Personal obligation for general partners; limited partners obligated for investment -All business income subject to personal taxation

S Corporations

-Shareholders of certain corporations unanimously elect to have the organization treated like a partnership for income tax purposes -Has all legal features of a corporation -Shareholders have to account on their individual income tax returns for shares of profits or losses -Shareholders avoid having a tax assessed on the corporate income -Cannot have more than 100 shareholders -Must be domestic, have allowable shareholders (individuals, not partners), S corps can only have 100 shareholders, only one class of stock

Limited Liability (LLP)

-don't share in the liability of their partners -variation of the LLC -have characteristics of both a partnership and a corporation

Limited Liability Company (LLC)

-treated as nontaxable entities -owners have more flexibility compared with S corporation -not a corporation -file articles of organization; organizers file them; must name corp as LLC or LLP; owners are members not shareholders; membership is not limited; if a member transfers their share they must dissolve the agreement (but there are ways around that) -dissenting members have a lot of the same rights as members -veil piercing can be applied here if 3 prongs are met

alien

A corporation created under the authority of a foreign country is called an __________ corporation.

Freedom of Information Act (FOIA)

A law that gives you the right to access information from the federal government.

B-Corp

A type of private certification rather than a legal business structure -usually costs more, must continue benefit efforts to uphold cert

Proxy

Agent appointed by a shareholder to vote on his/her behalf; a shareholder must use own money and resources to send a proxy; board of directors use proxies as a privilege (this insider free-reign causes lots of scandals)

Dissolution

Any change in the ownership of an organization that changes the legal existence of the organization; i.e. one partner dies so structure of the business changes

Corporation

Artificial, intangible entity created under the authority of a state's law

appoint

Board Members _________ Officers

Yes

Can you switch forms after you've formed a business?

Benefit Corporation

Corporation that combines aspects of non-profit and profit organizations in a way intended to permit businesses to make a profit while pursuing explicit, socially oriented goals NOT A B-CORP; this status is something you must file for

shareholders

Corporations are taxed as their own entity; when the corp holds back profits, the corp pays taxes, not the ____________

Federal Communications Commission v. AT&T

Court case regarding corporate personhood. Even though a corporation is treated the same as an individual under most aspects of the law, there are some rights that only individuals can possess. The Court determined that corporations do not have personal privacy rights, at least in the way intended by Congress.

Cost, control

Factors to consider when selecting a business's organizational form: - ______ of creation -Continuity of the organization (stability of the owners, if one owner dies or wants out) -Managerial _________ of decision (who's managing, potential conflicts, family-owned) -Owner liability (i.e. using a corporation allows limited liability but there is still some room for personal liability)

wrong, funds, unjust

For Alli v. U.S., the Court applied 3 elements: (1) corp committed a ________ (2) alli's commingled _______ with the organization (acted as if business funds were personal funds) (3) failure to pierce the veil would leave the HUD with an _______ loss

joint and severally liable

From a creditor's perspective, the personal liability of each partner extends to the organizations entire debt, not just a pro rata share. These partners are considered ________ & ________ _________

Derivative

If the majority is acting illegally or oppresses the rights of the minority shareholders, a lawsuit known as a ________ suit may be brought by a minority shareholder on behalf of the corporation.

assumed-name

If the name of a partnership is other than that of the partners, the partners must give notice as to their actual identity under the state's _________-________ statute.

Dissolve

In limited partnerships, if any partners change, you must file that to keep status as a limited partner; however they do not ________ like regular partnerships when they switch or pass away

limited liability

Limited partners can examine the books, amend the agreements to the partnership, etc; however, if they step over their boundaries they become general partners and lose _______ _________

Delaware Court of Chancery

Non-jury trial that serves as the state's original jurisdiction; considered "ticket" into a corporation -5 clerks -Del. legislature favors business, streamlined processes

5013C Status

Non-profit corporations have to maintain this; most people want that write-off in order to donate money

Employees

Officers hire ___________

Corporation

Once a ___________ is formed, it usually perpetually exists; if an owner dies, business generally keeps going

Closely held

Organizations owned by only a few persons (i.e. family owned and operated)

Publicly held

Owned by hundreds or even thousands of persons (i.e. those whose stock is traded on a public exchange)

Joint Venture

Partnership for a limited time, for a specific purpose

incentive

Partnership offers __________ for employees; if you work hard enough, you can be a partner too

Officers

People such as the president, vice president, secretary, treasurer, etc. who are charged with managing the daily operations of the corporation in an attempt to achieve the stated organizational objectives or goals.

disadvantage

Shared profits are a ___________ of partnerships - one partner works a lot less than the others, but everyone is paid the same

Articles of organization, organizers

That which is filed with a state official (usually the secretary of state) to create an LLC; and instead of incorporators, the term ________ is used

Alli v. United States

The Alli's claimed that the corporate structure shielded them from decisions made in the name of the corporation. The court concluded that Dr. Alli and his wife did not act as though the corporation was independent from their personal assets. The court also found that the corporate form had been used to commit a wrong by failing to adhere to obligations to keep BSA's properties in a decent and safe condition for tenants.

Articles of Incorporation

The formal application for a corporate charter

Delaware

The most popular place to incorporate; more than 50% of public companies and 60% of Fortune 500 companies incorporate there

Alter-Ego Theory

The way by which the corporate veil can be pierced, may also be used to impose personal liability upon corporate officers, directors, and stockholders.

Shareholders

There is limited personal liability for _______________; liable for debt to the extent of their share in the company; shareholders can be treated as partners when the corporate veil is "pierced" i.e. assigning to them unlimited liability

Limited partners

This type of partner is not personally responsible for the debts of the business organization; however, they are not permitted to be involved in the control or operations of the limited partnership

Buy and sell agreement

To prevent problems that may arise when a partner dies or withdraws from a partnership, the articles of partnership should include this

Revised Uniform Limited Partnership Act

Under the _______ ________ ________ __________ ______(RULPA), a limited partner's surname may not be used in the partnership's name unless there is a general partner with the same name.

Termination

When a business shuts down

Deceptive

When filing for corporation status, your name can't be close to anything on file or else they won't approve it due to that it might confuse the public/be __________

court

You must document yourself as a foreign corporation if you want the benefits of the _______

Shareholders

______________ elect Board of Directors