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Study Notes

Legal Issues for Business Organizations

TermDefinition
Sole Proprietorship most common form of busines in the US. No difference between the owner and the bussiness. The owner is the business.
Venture capital combine funds from instituion investors and high net-worth individuals (know as angel investors) to identify promising start-ups and funds them in private placement offerings
General Partnership agreement of two or more individuals to run a company together, share in the profits and losses of the business.
Articles of partnership writen contract that details a partnership agreement.
Buy/sell agreement sets forth agreement of partners on how to accound for withdrawoing partners's share.
Disregarded entity partnership is not considered for tax purposes. partners pay income tax.
Information return tax return that can be filed by a partnership to show incomen, lossses and how their are distributed to the partners.
Unlimited liablity all liability, debts and obligations
Limited partnership can have both general and limited partners. the limited partners only have limited liability. Limited partner can only loose what they invest.
Cooperation form of business that limites owners and investors liability, allows for flexibility in business operations, ability to offer shares, sell stock or securities in the company. seperate legal entity.
corporate law is state law, "no US corporation"
Delaware Chancery courts courts in Deleware, that deal with business. reputation for fairly and quickly applying a very well-developed body of corporate law in Deleware.
Articles of incorporation documents filed with state in which the company in incorporated. Give the name of the company, status(profit/non-profit), founders must give their identity, how long they will exist, purpose of the company, number of shares and the value of each share.
domestic corporation must operat in its state, but must register as a foreign corport to do business in anothe state.
shareholders owners of companies, but have no legal right to the company's assets. enjoy limited liability.
closely held corporation number of shareholders tend to be small,
publicly traded corporation large number of shareholders, value of the share determinde by the laws of suppy and demand.
subsidiary company whoes stock is owned by another corporation.
affiliate comany where some of its stock is owned by another corporation
preemtive rights gives founders of a corporation special rights, can refues to issue more stock to prevent dilution of their stock.
shareholder derivative lawsuit shareholders given a unique right ot sue a third party on behalf of eh corporation.
business judgement rule board members are generally immune form second-guessing for their decision as long as they act in good faith and in the corporation's best interests.
double taxation corporation must pay tax as a seperate legal entity. profit is then subject to tax when it is returned to shareholders as a dividends
S corporation usually smalll business. choose to be taxed like partnership/sole proprietorship, taxed at dividend is declared no orporate tax. no more than 100 shareholders all US Citzens or Aliens, one class of stock,no memer of an affiliated group of companies.
Created by: dawncreft