Chapter 15 BuLe

stock certificate

a certificate issued by a corporation evidencing the ownership of a specified number shares in the corporation

stock warrant

a certificate that grants the owner the option to buy a given number of shares of stock, usually within a set time period.

S corp

a close business corp that has met certain requirements set out in the Internal Revenue Code and thus qualifies for special income tax treatment,. Essentially, an S corp is taxed the same as a partnership, but its owners enjoy the privilege of limited liability

close corporation

a corporation whose shareholders are limited to a small group of persons, often only family members. In a close corporation the shareholders rights to transfer shares to others are usually restricted.

alien corporation

a designation in the US for a corporation formed in another country but doing business in the US

Dividend

a distribution to corporate shareholders of corporate profits or income, disbursed in proportion to the number of shares held

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

outside director

a member of the board of directors who does not hold a management position at the corporation

inside director

a member of the board of directors who is also an officer of the corporation

business judgement rule

a rule that immunizes corporate management from liabilities for actions that result in corporate losses or damages if the actions are undertaken in good faith and are within both the power of the corporation and the authority of the management to make

bylaws

a set of governing rules adopted by a corporation or other association

shareholders derivative suit

a suit brought by a shareholder to enforce a corporate cause of action against a third party

preemptive rights

rights held by shareholders that entitle them to purchase newly issued shares or a corporations stock, equal in percentage to shares already held, before the stock is offered to any outside buyers. Preemptive rights enable shareholders to maintain their proportionate ownership and voice in the corporation

watered stock

shares of stock issued by corporation receives, as payment, less than the stated value of the shares

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

quorum

the number of members of a decision making body that must be present before business may be transacted

retained earningsq

the portion of a corporations profits that has not been paid out as dividends to shareholders

commingle

to put funds or goods together into one mass so that they mixed to such degree that they are no longer having 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

Piercing the corporate veil

an action in which a court disregards the corporate entity and holds the shareholders personally liable for corporate debts and obligations

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 law of, that state

proxy

in corporate law, a written agreement between a stockholder and another party in which the stockholder authorizes the other party to vote the stockholders shares in a certain manner