Chapter 39
securities
Generally, corporate stocks and bonds. A security may also be a note, debenture, stock warrant, or any document given as evidence of an ownership interest in a corporation or as a promise of repayment by a corporation.
foreign corporation
In a given state, a corporation that does business in the state without being incorporated therein.
domestic corporation
In a given state, a corporation that does business in, and is organized under the laws of, that state.
ultra vires
A Latin term meaning "beyond the powers"; in corporate law, acts of a corporation that are beyond its express and implied powers to undertake.
bond
A certificate that evidences a corporate (or government) debt. It is a security that involves no ownership interest in the issuing entity.
S corporation
A close business corporation that has met certain requirements as set out by the Internal Revenue Code and thus qualifies for special income tax treatment. Essentially, an S corporation is taxed the same as a partnership, but its owners enjoy the privilege of limited liability.
holding company
A company whose business activity is holding shares in another company.
publicly held corporation
A corporation for which shares of stock have been sold to the public.
public corporation
A corporation owned by a federal, state, or municipal government; not to be confused with a publicly held corporation.
closely held corporation
A corporation whose shareholders are limited to a small group of persons, often including only family members. The rights of shareholders of a close corporation usually are restricted regarding the transfer of shares to others.
alien corporation
A designation in the United States for a corporation formed in another country but doing business in the United States.
dividend
A distribution to corporate shareholders of corporate profits or income, disbursed in proportion to the number of shares held.
bylaws
A set of governing rules adopted by a corporation or other association.
bond indenture
A written agreement between a bond issuer and the bondholders, normally consisting of a specified interest rate, maturity date, and other terms; sometimes simply called an indenture.
common stock
Shares of ownership in a corporation that give the owner of the stock a proportionate interest in the corporation with regard to control, earnings, and net assets; shares of common stock are lowest in priority with respect to payment of dividends and distribution of the corporation's assets on dissolution.
articles of incorporation
The document filed with the appropriate governmental agency, usually the secretary of state, when a business is incorporated; state statutes usually prescribe what kind of information must be contained in the articles of incorporation.
retained earnings
The portion of a corporation's profits that has not been paid out as dividends to shareholders.
pierce the corporate veil
To disregard the corporate entity, which limits the liability of shareholders, and hold the shareholders personally liable for a corporate obligation.
commingle
To mix together. To put funds or goods together into one mass so that the funds or goods are so mixed that they no longer have separate identities. In corporate law, if personal and corporate interests are commingled to the extent that the corporation has no separate identity, a court may "pierce the corporate veil" and expose the shareholders to personal liability.
stock
An equity (ownership) interest in a corporation, measured in units of shares.
venture capital
Capital (funds and other assets) provided by professional, outside investors (venture capitalists, usually groups of wealthy investors and investment banks) to start new business ventures.
preferred stock
Classes of stock that have priority over common stock both as to payment of dividends and distribution of assets on the corporation's dissolution.
private equity capital
Private equity capital is a financing method by which a company sells equity in an existing business to a private or institutional investor.
