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LOMA 311- ISTAR > chapter 3 > Flashcards

chapter 3 Flashcards

1
Q

What are the 3 primary forms of business organizations in the US?

A
  1. Sole proprietorships
  2. partnerships
  3. corporations
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2
Q

What is a sole proprietorship?

A

is a business that is owned and operated by one individual who is known as the sole proprietor. Its the simplest, and requires no government action.

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3
Q

define a partnership in terms of business organization

A

a partnership is an association between two or more individuals, known as the partners, who enter into an agreement to own and operate a business for profit.

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4
Q

is government action required for partnership businesses

A

no

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5
Q

who is reponsible for the debts and profits of a partnership and sole proproetorship business?

A

the owners, and or/ partners

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6
Q

which type of business organization is taxes as a legal entitity?

A

corporations

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7
Q

what do you call the partnership in which all the partners have unlimited personal liability for partnership debts?

A

general partnerships and the partners are known as general partners

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8
Q

What is a corporation?

A

a legal entity that is created by the authority of a governemntal unit, that is separate and distinct from the people who own it. I

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9
Q

What are two characteristics that separate corporatoins from sole propriertorship and partnership?

A
  1. a corporation is separate from its owners. the debts and liabilties belong to the corporation.
  2. business continues beyond the death of any or all of its owners.
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10
Q

What is a limited partnership??

A

a partnership corsisting of one or more general partners who are responsible for running the business and have unlimited peronal liabilited for partnership debts and one or more limited partners who invest in the business but are not involved in running the business.

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11
Q

What is a limited libability partnership?

A

this partnership protects a partner from personal liability for the negligent acts committed by other partners or by employees who are not under the partners’ direct control.

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12
Q

What is a Limited liability company?

A

a legal entitity that has some characteristics of sole proprietorship and partnerships and some characteristics of a corporation.
these companies can chose how to be taxes

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13
Q

how is an LLC like a corporation?

A
  1. certain documents must be filled with the applicable state in order to create an LLC and
  2. the owners have limited personal liability for the debts of the business.
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14
Q

What is a professional corportation?

A

a corporation composed of individuals who provide services that require a professional license.
he is personally liable for his own acts of malpractice, but no liable for acts of malpractice by other professions at the firm

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15
Q

what is a domestic corporation?

A

a corporation that was incorporated within that jurisdiction

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16
Q

What makes a company a foreign corporation ?

A

it is incorporated under the laws of another US state

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17
Q

what do you call a corporation incorporated under the laws of another country?

A

alien corporation.

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18
Q

In other countries other than the US, what do you call comapanies incorporated within the country and out?

A
  1. domestic corporations

and foreign- if its another country

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19
Q

what is a publicly traded corporation?

A

a corporation whose stock is available for sale to the general public

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20
Q

what is a close corporation?

A

a corporation that has issued stock which is owned by a relatively small group of people often members f the same family and not the public. https://soundcloud.com/djmetime/me-time-live-at-home-brew

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21
Q

What is a model law?

A

a sample law that has been created and adopted by a national or international organization of regulators, lawmakers, layers and or academic/ the sponsoring organization then encourages legislatures to enact laws based on the model.

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22
Q

To incorporate a business in a given state a company must usually file an article of incorporation, which is a document that describes some of the essential features of the corporation. What information is usually included on this document?

A
  1. name and address of incorporators
  2. name of propsed corporation
  3. street address of the corporations registered office and the name of the corporations registered agent at that address
  4. the number of shares of stock that the corporation is authorized to issue.
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23
Q

What is the name of the organization that studies and reviews the laws of the states to determine which areas of law should be uniform across the US and then drafts model laws in those areas and encourages their anactment bu the state legilatures

A

Unifrom law commission

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24
Q

What is the name of the nonprofit association of the insurance commissioners of all US states and territories? its promary function is to promote uniformity

A

National association of insurance commissioners

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25
Q

What is the name of the group within the united nations authorizsed to prepare and promote the adoption of new internaitonal treaties and model laws concerning international trade?

A

united nations commissions on international trade law

26
Q

define bylaws

A

the basic rules under which the corporation operates.

it states informaiton such as suties, meetings that will be held, and rules under which stock will be issued.

27
Q

Who are the 3 groups of people involved in the management of a corporation?

A
  1. board of directors,
  2. officers of the corporation
  3. stockholders
28
Q

What is a director?

A

an individual who is appointed or elected by the stockholder to manage and direct the affairs of a corporation

29
Q

what do you call a collection of directors?

A

the corporations board of directors.

30
Q

What do you call the directors who are employed by the corporation and are major stockholders, and what do you call those who are not employed or have no significant direct interest in the corporation?

A

inside directors vs. oustide directors

31
Q

Actions of a board are legally binding on the corporation if they are the result of a legal code by at least a quorum of the board members. Define quorum

A

is a specified percentage of an entire body.

32
Q

Directors are fiduciaries who are obligated to act in the best interests of the corporations stockholders. what is a fiduciary?

A

an entity or individual who holds a special position of trust or confidence when handling the affairs of another and who must put that others’ interest above the fiduciary’s own.

33
Q

As fiduciaries, directors have what 2 duties (think ethical)

A
  1. Duty of loyalty and good faith

2. duty to exercise due care in carrying out responsibility

34
Q

What is the business judgement rule state?

A

it states that directors will not be held personally liable for making business dec sisions if there is a reasonable basis to believe that the directors acted in good faith and with due care.

35
Q

When would a corporate director be personally liable for his actions?

A
  1. when he acted in bad faith- knowingly commits a wrong or fails to fulfill a legal duty with a dishonest move
  2. abuse their discretion
  3. guilty of gross negligence0 fails to perform a legal duty in reckless disregard of the consequences of that failure
  4. commit fraud. - intentionaly deceives another party
36
Q

What is an officer of a corporation?

A

individuals, such as the president and treasurer, who are responsible for carrying out important management functions for the day-to-day operations of the corporation.

37
Q

Are officers fiduciaries?

A

yes they are obligated to act in the best interrests of the corporation and its stockholders.

38
Q

Are officers afforded protection under the business judgement rule?

A

no they may be personlly liable for acts that are negligence, which involves an element of willful misconduct.

39
Q

Name 4 ownershipk rights of stockholders in a corporation.

A
  1. elect board of directors
  2. inspect the corporations financial records, books and papers
  3. attend annual stockholder meetings and vote on certain important corporate matters
  4. share in the corporations profits when divided and declared
40
Q

What is a dividend?

A

a payment of a portion of the coroporations profits to the corporations owners.

41
Q

what is a record date and distribution date in terms of dividends paid to the stockholders?

A
  1. record date: date which a person must be a registarded stockholder of the company
  2. distribution date: payment date.
42
Q

What is common stock?

A

an equity security that entitles its owners to share in the issuing corporations dividends and provides its owners with the right to cote on certain corporate matters.

43
Q

Who are the risk to elect the corporations board of directors?

A

only owners of the corporations common stock

44
Q

What is preferred stock?

A

an equity security that entitles its owners to certain preferences- or first rights- that common stockholders do not have.

45
Q

Who has the firs right to receiving dividends?

A

the preferred stockholders.

46
Q

There are four types of preferred stocks. Name them.

A
  1. cumulative preferred
  2. callable preferred
  3. participating preferred.
  4. Convertible preferred
47
Q

What is callable preferred stock

A

preferred stock that includes a call feature, which enables the issuing corporation to redeem or repurchase the stock at a stated call price.

48
Q

There are two types of corporate restructure transactions. Name them.

A
  1. mergers

2. acquisitions

49
Q

Define a merger

A

a transaction in which one corporation is absorbed into another corporation b y combining its assets and liabilities with those of the surviving corporation.
only one corporations survives

50
Q

Define an acquisition

A

a transaction wherein one corporation purchases a controlling interest in another corporation, results in a linkage between formerly independent corporations. ;- both company survive as separate entities

51
Q

What is the purpose of an antitrust law?

A

designed to protect commerce against the monopolization of market power and unlawful retraints of trade.

52
Q

What is a company dissolution

A

the termination of a corporations legal existence

53
Q

When do you get a voluntary dissolution?

A

occurs as a result of a cote of the corporations stockholders.

54
Q

When do you get an involuntary dissolution?

A
  1. the domicilary state had the right to dissolve the corporation in certain circumstances.
  2. court order begun by corporations stockholders, (happens when directors are hopelessy deadlocked into how to manage the business)
  3. a court order begun by creditor of the corporation- when business unable to satisfy its judgement d/t insolventcy.
55
Q

what is liquidation?

A

a process in which a corporation that is being dissolved pays its debts or makes arragements to pay those debts. if assets rfemain, they are paid out on a pro rata basis to the corporations stockholders in the order of their priorities. `

56
Q

What is a company limited by shares?

A

a company whos owner’s liability is limited to the investment they made when purchased the4 company;s shares

57
Q

What is a company limited by guareentee?

A

a company whos owners agree to pay up to a stated amount if the company is liquidated.

58
Q

How can foreign companies operate in most jurisdictions?

A
  1. incorporating a business in the host country that operates as a subsidairy
  2. opening a branch in the host country that is properly registered with the host governemnt
  3. entering into a joint venture with a local company
59
Q

what is a joint venture?

A

an arragement between two otherwise independent businesses that agree to undertake a specific project together for a specified time period.

60
Q

What is a multinational corporation?

A

a corporation that operates in more than one country and makes major operational decisions within a global context.

61
Q

What legal and regulatory compliance issues may a multinational corporation face?

A
  1. comply with laws of their own home country
  2. comply with laws in each country they conduct busienss
  3. affected by international treaties

LOMA 311- ISTAR (15 decks)

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