Fundamentals Flashcards
What is a corporation?
A corporation is a legal entity that is separate from its owners (shareholders) and can conduct business, enter into contracts, and own property.
What are the advantages of forming a corporation?
Advantages of forming a corporation include limited liability for shareholders, the ability to raise capital by selling stock, and perpetual existence.
What are the disadvantages of forming a corporation?
Disadvantages of forming a corporation include higher taxes, increased regulation, and the need to comply with formalities such as holding annual meetings and keeping minutes.
What is limited liability?
Limited liability is the concept that shareholders are not personally liable for the debts or obligations of the corporation.
What are the different types of corporations?
The different types of corporations include C corporations, S corporations, and nonprofit corporations.
What is a shareholder?
A shareholder is an owner of a corporation, typically represented by stock.
What is a director?
A director is a member of the board of directors, responsible for overseeing the management and direction of the corporation.
What is a board of directors?
A board of directors is a group of individuals elected by the shareholders to oversee the management and direction of the corporation.
What is a fiduciary duty?
Fiduciary duty is the legal obligation of directors and officers to act in the best interests of the corporation and its shareholders.
What is a shareholder derivative suit?
A shareholder derivative suit is a lawsuit brought by a shareholder on behalf of the corporation against a third party, typically alleging breach of fiduciary duty by a director or officer.
What is piercing the corporate veil?
Piercing the corporate veil is a legal concept that allows a court to hold shareholders personally liable for the debts or obligations of a corporation under certain circumstances.
What is an S corporation?
An S corporation is a type of corporation that allows for pass-through taxation and limits the number and type of shareholders.
What is a C corporation?
A C corporation is a type of corporation that is subject to corporate taxation and has no limits on the number or type of shareholders.
What are the requirements for forming a corporation?
Requirements for forming a corporation may vary by state, but typically include filing articles of incorporation, designating a registered agent, and adopting bylaws.
What is a bylaw?
A bylaw is a set of rules and procedures adopted by a corporation for its internal governance.
