Business Law: Chapter 39
Ultra vires
"beyond the power." In corporate law, acts of corporation that are beyond its express or implied powers are ultra vires acts
S corporation
A closely held corporation that meets the qualifying requirements specified in the Subchapter S of the Internal Revenue Code. It can avoid the imposition of income taxes at the corporate level while retaining many of the advantages of a corporation, particularly limited liability
Holding company
A company whose business activity consists of holding shares in another company
Public corporation
A corporation formed by the government to meet some political or governmental purpose
Alien corporation
A corporation formed in another country but doing business in the U.S. is referred to in the U.S. as an alien corporation
Foreign corporation
A corporation formed in one state but doing business in another is referred to in the second state as a foreign corporation
Domestic corporation
A corporation is referred to as a domestic corporation by its home state (the state in which it incorporates)
Closely held corporation
A corporation whose shares are not publicly traded and all shares are held often by family members or a small group of persons personally known to each other
Publicly held corporation
A corporation whose shares are publicly traded in a securities market, such as the New York Stock Exchange or NASDAQ
Preferred stock
An equity security with preferences
Bond indenture
Because debt financing represents a legal obligation on the part of the corporation, various features and terms of a particular bond issue are specified in a specific lending agreement
Venture capital
Capital provided to new business ventures by professional, outside investors
Securities
Corporations are financed by the issuance and sale of these, which include stocks and bonds
Bylaws
Internal rules of management adopted by the corporation at its first organizational meeting
Pierce the corporate veil
Occasionally, the owners use a corporate entity to perpetrate a fraud, circumvent the law, or in some other way accomplish an illegitimate objective. In these situations, the courts will ignore the corporate structure and pierce the corporate veil, exposing the shareholders to personal liability
Private equity capital
Private equity firms obtain their capital from wealth investors in private markets
Common stock
Provides a proportionate intersect in the corporation with regard to control, earnings, and net assets
Bonds
Represent the borrowing of funds by firms (and governments
Stocks
Represent the purchase of ownership in the business firm
Alter-ego theory
Sometimes, courts pierce the corporate veil under the theory that the corporation was not operated as a separate entity, but was just another side of the individual or group who actually controlled the corporation
Articles of incorporation
The primary document needed to incorporate a business
Retained earnings
When a corporation earns profits, it can either distribute them to its shareholders in the form of dividends or retain the profits. These retained earnings, if invested properly, will yield higher corporate profits in the future and thus cause the price of the company's stock to rise
Commingled
When personal and corporate interests are mixed together to the extent that the corporation has no separate identity
