Legal terminology Flashcards
When is a company considered insolvent?
A company is insolvent when it cannot pay its debts on time or when its liabilities exceed its assets.
What is Intellectual Property?
Your intangible property, such as inventions, which are protected via copyrights, patents, design rights and trademarks.
What is issued share capital?
The total amount of shares which are issued by a company and held by shareholders.
What is a joint venture?
Involved two or more businesses agreeing to pool their resources and work together on a specific task or objective.
What is a leasehold?
When you buy a leasehold property, you’ll take over the lease from the previous owner for a fixed amount of time. You do not own the land the property is on. The opposite of this is a freehold property.
What is leveraged finance?
Using third party debt to undertake a project.
What is liability?
Something a person or company owes, usually a sum of money. Liabilities are settled over time through the transfer of economic benefits including money, goods, or services.
What is licensing?
Involves a business (‘licensor’) permitting another (‘licensee’) to use an element of its business, usually in exchange for a royalty.
What is a limited liability partnership?
A Limited Liability Partnership (LLP) is a type of business structure that combines features of both a partnership and a company.
Here’s a simple breakdown:
Limited Liability – Unlike a regular partnership, where partners are personally responsible for debts, an LLP protects its partners. This means their personal assets are safe if the business faces losses. Separate Legal Entity – An LLP is its own legal entity, meaning it can own assets, sign contracts, and sue or be sued, just like a company. Flexible Management – Unlike a company that requires a board of directors, an LLP is managed by its partners, making operations more flexible. Tax Benefits – LLPs are taxed like partnerships, meaning they avoid double taxation (where both the business and the owners are taxed separately).A partnership where all or some of the partners have limited liability.
What is liquidation?
Applies to companies or partnerships and involves the realisation and distribution of the assets and usually the closing down of the business.
What is litigation?
The commencement of legal action through the courts.
What are management buy-outs/buy-ins?
‘Buy-out’ refers to an acquisition of a company led by that company’s existing management team. ‘Buy-in’ is where an acquisition is led by an external team of managers.
What is mediation?
A process conducted confidentially that involves the parties in a dispute nominating a neutral third party (‘facilitator’) to assist them in working towards a mutually beneficial arrangement.
What is a merger?
An agreement that unites two existing companies into a new company.
What is money laundering?
The illegal process of making large amounts of money generated by criminal activity appear to have come from a legitimate source.
What is a monopoly?
Where a business owns such a large share of the market that it has total or substantial control over trade within that market.
What is a non-executive director?
A member of a company’s board of directors who acts as an independent advisor and is involved in policymaking and planning exercises.
What is offshoring?
Involves shifting elements of production or distribution abroad, usually where costs such as labour are lower.
What is outsourcing?
Involves a business contracting out various roles/processes to external companies.
What are patents?
Protect inventions that have an ascertainable use or application and are new, unique and non-obvious.
What is private equity?
Private equity (PE) is a type of investment where money is pooled from investors to buy, improve, and later sell companies for a profit. Unlike public stocks, PE investments are in private companies (or public companies that are taken private
What is remuneration?
The total compensation received by an employee, including base salary, bonuses, commission payments, and other financial benefits.
What is security?
A right given by a borrower to a lender that typically entitles the lender to take control of some (or all) of the borrower’s assets if the borrower fails to repay the loan as agreed.
What is settlement?
A resolution between disputing parties about a legal case, reached either before or after court action begins.
