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Business Law > TEST 4: CH 36 > Flashcards

TEST 4: CH 36 Flashcards

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1
Q

Corporation

A
  • a fictitious legal entity that is created according to statutory requirements
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2
Q

How does a corporation form?

A
  • same as lllp
  • they have to apply to the secretary of state’s office and ask for charter
  • corporate charter allows corporation to exist
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3
Q

Shareholders

A
  • owners of a corporation who elect the board of directors and vote on fundamental changes in the corporation
  • only votes for board of directors
  • 50 or less shareholders
  • shares not traded or sold separately
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4
Q

Board of Directors

A
  • if non profit, they are called trustees

- can hire and fire high corporate officers

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5
Q

Corporation Codes

A
  • state statutes that regulate the formation, operation, and dissolution of corporations
  • courts interpret state corporation statutes to decide individual corporate and shareholder disputes
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6
Q

True or False: A corporation is a separate legal entity

A
  • true
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7
Q

True or False: Corporations can not be found civilly and criminally liable for violations of the law.

A
  • false, they can be found civilly and criminally liable
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8
Q

True or False: Corporations can sue or be sued in their own names.

A
  • true
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9
Q

Free Transferability of Shares

A
  • a characteristic of corporations

- national securities markets have been developed for the organized sale of securities

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10
Q

Perpetual Existence

A
  • unless a specific duration is stated in a corporation’s articles of incorporation
  • can be voluntarily terminated by the shareholders
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11
Q

Centralized Management

A
  • board of directors makes policy decisions concerning the operation of a corporation
  • high corporate officers run the corporation
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12
Q

Limited Liability of Shareholders

A
  • corporations are liable for their own debts and obligations
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13
Q

Public Corporation

A
  • a corporation formed to meet a specific governmental or political purpose
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14
Q

Municipal Corporations

A
  • local government corporations
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15
Q

Private Corporations

A
  • a corporation formed to conduct privately owned business
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16
Q

Profit Corporation

A
  • created to conduct a business for profit

- can distribute profits to shareholders in the form of dividends

17
Q

Not-for-profit Corporation

A
  • a corporation formed to operate charitable institutions, colleges, universities, and other not-for-profit entities
18
Q

Publicly Held Corporation

A
  • many shareholders
  • shares traded on organized security markets
  • shareholders rarely involved in management
19
Q

Closely Held Corporation

A
  • few shareholders
  • shareholders may have buy-and-sell agreements
  • shareholders often involved in management
20
Q

Professional Corporation

A
  • a corporation formed by lawyers, doctors, or other professionals
  • shareholders are called members
    > not usually liable for torts committed by agents or employees
    > may be liable for malpractice of members
21
Q

True or False: The owner of a professional corporation must practice the profession.

A
  • true
22
Q

Article of Incorporation

A
  • basic governing documents of the corporation
  • must be filed with secretary of state of incorporation
  • may contain term, purpose, limitation, regulations of affairs
23
Q

Corporate Charter

A
  • lasts forever unless secretary of state revokes it
  • secretary of state could revoke it for good, bad, or no reason
  • secretary of state could revoke the charter at any time
24
Q

Corporate ByLaws

A
  • a detailed set of rules adopted by the board directors after the corporation is incorporated
  • contains provisions for managing the business and affairs of the corporation
  • governs internal management structure
25
Q

Corporate Seal

A
  • a design that contains the name of the corporation and the date of incorporation
26
Q

Organizational Meeting

A
  • must have at least one of these every year

- a meeting held by the initial directors of the corporation after the articles of incorporation are filed

27
Q

Ultra Vires Act

A
  • an act by a corporation that is beyond its express or implied powers
28
Q

Delaware General Corporation

A
  • attract corporate formations
  • more than 50% of publicly traded corporations in America are incorporated in Delaware
  • most advanced corporation law in the country
29
Q

Equity Securities (Stocks)

A
  • representation of ownership rights to a corporation
30
Q

Common Stock

A
  • a type of equity security that represents the residual value of a corporation
  • no preferences
  • no fixed maturity date
31
Q

Par Value Shares

A
  • common stock on which the corporation has set the lowest price
32
Q

No Par Value Shares

A
  • no assigned par value
33
Q

Preferred Stock

A
  • a type of equity security that is given certain preferences and rights over common stock
34
Q

Preferred Stockholder

A
  • a person who owns preferred stock
35
Q

Dividend Preference

A
  • the right to receive a fixed dividend at stipulated periods during the year
36
Q

Liquidation Preference

A
  • the right to be paid a stated dollar amount if a corporation is dissolved and liquidated
37
Q

Winding-Up Liquidation (Stock)

A
  • the process by which a dissolved corporation’s assets are collected, liquidated, and distributed to:
    1. creditors
    2. shareholders
    3. other claimants
38
Q

Termination

A
  • the ending of a corporation that occurs only after the:
    1. winding-up
    2. liquidation of assets
    3. distribution of the proceeds to claimants

Business Law (13 decks)

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