Chapter 21 - Corporations Flashcards
Promoter
Someone who organizes a corporation
Adopt
Agree to be bound by terms of a contract
Novation
A new contract
Incorporation Process
Firm can do business in any state even if it does not reside in that state
Domestic Corporation
When company establishes in the state in which it was formed
Foreign Corporation
When company operates in the state where it is not incorporated
Registered Agent
Someone hired by a business to serve as its official presence in the state
Incorporator
Person who signs charter and files it to secretary of state
Treasury Stock
Stock that a company has sold, but later bought back
Minute Book
Book that contains summary of corporation’s official actions
Bylaws
Document specifying rules of an organization
Quorum
Percentage of stock that must be represented for a meeting to count
Winding Up
Officers of corporation pay their debts and distribute remaining property to shareholders
Piercing the Corporate Veil
Court holds shareholders personally liable for debts of the corporation
Business Judgement Rule
Managers have an affirmative duty to protect the interests of shareholders and the corporation
Activist Investor
Shareholder with a large block of stock whose goal is to influence management decisions and strategic direction
Right To Information
Shareholders acting in good faith and with proper purpose have right to inspect corporation documents
When must a corporation seek a shareholder vote?
Charter amendments, mergers, sale of major assets, dissolution
Proxy
Person whom a shareholder appoints to vote for them at a corporation meeting
Proxy Statement
Information a company provides to shareholders in preparation for annual meeting
Plurality Voting
To be elected, a candidate only needs to receive more votes than his opponent
Majority Voting
Directors must resign if more than half the shares that vote withhold their vote from them
Zombie Directors
Directors who serve on a board with less than majority support from shareholders
Independent Directors
Members of the board of directors who are not employees of the company and do not have close ties with the CEO
Inside Directors
Members of board of directors who are also employees of the corporation
Net Returns on Invested Capital
Company’s return on capital investment, such as plant and equipment
Clawback Policy
Public company must establish to ensure CEO reimburses company any bonuses they received for flawing financials
