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Chapters 1-6

ACCT 568 - Business Law

TermDefinition
Entrepreneur One who initiates and assumes the financial risks of a new enterprise and who undertakes to provide or control its management.
Franchise Any arrangement in which the owner of a trademark, trade name, or copyright licenses another to use that trademark, trade name, or copyright, under specified conditions or limitations, in the selling of goods and services.
Franchisee One receiving a license to use another's (the franchisor's) trademark, trade name, or copyright in the sale of goods and services.
Franchisor One licensing another (the franchisee) to use his or her trademark, trade name, or copyright in the sale of goods or services.
Sole proprietorship The simplest form of business, in which the owner is the business; the owner reports business income on his or her personal income tax return and is legally responsible for all debts and obligations incurred by the business.
Articles of partnership A written agreement that sets forth each partner's rights and obligations with respect to the partnership.
Buy-sell agreement An agreement made at the time of partnership formation for one or more of the partners to buy out the other or others should the situation warrantand for the smooth dissolution of the partnership.
Buyout price The amount payable to a partner on his or her dissociation from a partnership, based on the amount distributable to that partner if the firm were wound up on that date, and offset by any damages for wrongful dissociation.
Certificate of limited partnership The basic document filed with a designated state official by which a limited partnership is formed.
Charging order In partnership law, an order granted by a court to a judgment creditor that entitles the creditor to attach profits or assets of a partner on dissolution of the partnership.
Dissociation The severance of the relationship between a partner and a partnership when the partner ceases to be associated with the carrying on of the partnership business.
Dissolution The formal disbanding of a partnership or a corporation by(1)acts of the partners/shareholders/board of directors(2)the death of a partner(3)the expiration of a time period stated in agreement/certificate(4)judicial decree.
Family limited liability partnership (FLLP) A limited liability partnership in which the majority of the partners are persons related to each other. All of the partners must be natural persons or persons acting in a fiduciary capacity for the benefit of natural persons.
General partner In a limited partnership, a partner who assumes responsibility for the management of the partnership and liability for all partnership debts.
Goodwill In the business context, the valuable reputation of a business viewed as an intangible asset.
Information return A tax return submitted by a partnership that reports the income earned by the business. A partner's profit from the partnership is taxed as individual income to the individual partner.
Joint and several liability In partnership law, a doctrine under which a plaintiff may sue, and collect a judgment from, one or more of the partners separately (severally, or individually) or all of the partners together (jointly).
Joint liability Shared liability. In partnership law, partners incur joint liability for partnership obligations and debts.
Limited liability limited partnership (LLLP) A type of limited partnership, the liability of all partners, both general and limited, is limited to the amount of their investments in the firm.
Limited liability partnership (LLP) A form of partnership that allows professionals to enjoy the tax benefits of a partnership while limiting their personal liability for the malpractice of other partners.
Limited partner In a limited partnership, a partner who contributes capital to the partnership, has no right to participate in the m&o of the business, and assumes no liability for partnership debts beyond the capital contributed.
Limited partnership (LP) A partnership consisting of one or more general partners and one or more limited partners.
Partnership An agreement by two or more persons to carry on, as co-owners, a business for profit.
Partnership by estoppel A judicially created partnership. The court can prevent those who present themselves as partners (but who are not) from escaping liability if a third person relies on an alleged partnership and is harmed as a result.
Pass-through entity Any entity that does not have its income taxed at the level of that entity; examples are partnerships, S corporations, and limited liability companies.
Winding up The second of two stages involved in the termination of a partnership or corporation. Once the firm is dissolved, it continues to exist legally until the process of collecting and distributing the firm's assets is complete.
Articles of organization The document filed with a designated state official by which a limited liability company is formed.
Business plan A document describing a company, its products, and its anticipated future performance. Creating a business plan is normally the first step in obtaining loans or venture-capital funds for a new business enterprise.
Business trust A voluntary form of business in which trust beneficiaries transfer cash/property to trustees in exchange for trust certificates. Management is handled by the trustees, certificate holders have limited liability and share in the trust's profits.
Cooperative An association that is organized to provide an economic service to its members. Will make distributions of dividends to its owners on the basis of their transactions with the cooperative rather than on the basis of the amount of capital they contributed.
Crowdfunding A cooperative activity in which people network and pool funds and other resources via the Internet to assist a cause (such as disaster relief) or invest in a venture (business).
Joint stock company A hybrid form of organization,(corp)s/h-owners, managed by dir/officers, perpetual existence,(part)formed by agreement, property held in the names of members, s/h have personal liability for business debts. Partnership for tax and other legal purposes.
Joint venture A joint undertaking of a specific commercial enterprise by an association of persons. A joint venture is normally not a legal entity and is treated like a partnership for federal income tax purposes.
Limited liability company (LLC) A hybrid form of business enterprise that offers the limited liability of the corporation but the tax advantages of a partnership.
Member The term used to designate a person who has an ownership interest in a limited liability company.
Operating agreement In a limited liability company, an agreement in which the members set forth the details of how the business will be managed and operated.
Syndicate An investment group of persons or firms brought together for the purpose of financing a project that they would not or could not undertake independently.
Venture capitalist A person or entity that seeks out promising entrepreneurial ventures and funds them in exchange for equity stakes.
Alien corporation A designation in the United States for a corporation formed in another country but doing business in the United States.
Articles of incorporation The document filed with the appropriate governmental agency, usually the secretary of state, when a business is incorporated; state statutes usually prescribe what kind of information must be contained in the articles of incorporation.
Benefit corporation A for-profit corporation that seeks to have a material positive impact on society and the environment. This new business form is available by statute in a growing number of states.
Bond A certificate that evidences a corporate (or government) debt. It is a security that involves no ownership interest in the issuing entity.
Bond indenture A written agreement between a bond issuer and the bondholders, normally consisting of a specified interest rate, maturity date, and other terms; sometimes simply called an indenture.
Bylaws A set of governing rules adopted by a corporation or other association.
Close corporation A corporation whose shareholders are limited to a small group of persons, often only family members. The rights of shareholders of a close corporation usually are restricted regarding the transfer of shares to others.
Commingle To put funds or goods together into one mass so that the funds or goods are so mixed that they no longer have separate identities.
Common stock Shares of ownership in a corporation that give the owner of the stock a proportionate interest in the corporation with regard to control, earnings, and net assets; are lowest in priority with respect to dividends and distribution of assets on dissolution.
Dividend A distribution to corporate shareholders of corporate profits or income, disbursed in proportion to the number of shares held.
Domestic corporation In a given state, a corporation that does business in, and is organized under the laws of, that state.
Foreign corporation In a given state, a corporation that does business in the state without being incorporated therein.
Holding company A company whose business activity is holding shares in another company.
Pierce the corporate veil To disregard the corporate entity, which limits the liability of shareholders, and hold the shareholders personally liable for a corporate obligation.
Preferred stock Classes of stock that have priority over common stock as to payment of dividends and distribution of assets on the corporation's dissolution.
Private equity capital Funds invested in a private company in exchange for an ownership interest. Can be used to fund new technologies, expand working capital within an owned company, make acquisitions, or to strengthen a balance sheet.
Public corporation A corporation owned by a federal, state, or municipal governmentnot to be confused with a publicly held corporation.
Publicly held corporation A corporation for which shares of stock have been sold to the public.
Retained earnings The portion of a corporation's profits that has not been paid out as dividends to shareholders.
S corporation A close business corporation that has met certain requirements as set out by the Internal Revenue Code. An S corporation is taxed the same as a partnership, but its owners enjoy the privilege of limited liability.
Securities Generally, corporate stocks and bonds. A security may also be a note, debenture, stock warrant, or any document given as evidence of an ownership interest in a corporation or as a promise of repayment by a corporation.
Stock An equity (ownership) interest in a corporation, measured in units of shares.
Ultra vires A Latin term meaning beyond the powers; in corporate law, acts of a corporation that are beyond its express and implied powers to undertake.
Business judgment rule A rule that immunizes corporate management from liability for actions that result in corporate losses or damages if the actions are undertaken in good faith and are within both the power of the corporation and the authority of management to make.
Inside director A person on the board of directors who is also an officer of the corporation.
Outside director A person on the board of directors who does not hold a management position at the corporation.
Preemptive rights Rights held by s/h that entitle them to purchase newly issued shares of a corp's stock, equal in % to shares presently held, before the stock is offered to any outside buyers,enable s/h to maintain their proportionate ownership and voice in the corp.
Proxy In corporation law, a written agreement between a stockholder and another under which the stockholder authorizes the other to vote the stockholder's shares in a certain manner.
Quorum The number of members of a decision-making body that must be present before business may be transacted.
Shareholder's derivative suit A suit brought by a shareholder to enforce a corporate cause of action against a third person.
Stock certificate A certificate issued by a corporation evidencing the ownership of a specified number of shares in the corporation.
Stock warrant A certificate that grants the owner the option to buy a given number of shares of stock, usually within a set time period.
Voting trust An agreement (trust contract) under which legal title to shares of corporate stock is transferred to a trustee who is authorized by the shareholders to vote the shares on their behalf.
Watered stock Shares of stock issued by a corporation for which the corporation receives, as payment, less than the fair market value of the shares.
Appraisal right The right of a dissenting shareholder, if he or she objects to an extraordinary transaction of the corporation, to have his or her shares appraised and to be paid the fair value of his or her shares by the corporation.
Articles of merger A document, filed with the secretary of state, that sets forth the terms and conditions of the merger.
Consolidation A contractual and statutory process in which two or more corporations join to become a completely new corporation. The original corporations cease to exist, and the new corporation acquires all their assets and liabilities.
Merger A contractual and statutory process in which one corporation (surviving corp) acquires all of the assets and liabilities of another corporation (merged corp). The s/h of the merged corporation receive either payment or shares in the surviving corporation.
Parent corporation A corporation that owns all of the shares of another corporation (known as its subsidiary).
Parent-subsidiary merger A merger of companies in which one company (the parent corporation) owns most of the stock of the other (the subsidiary corporation).
Receiver In a corporate dissolution, a court-appointed person who winds up corporate affairs and liquidates corporate assets.
Share exchange Some or all of the shares of one corporation are exchanged for some or all of the shares of another corporation, but both corporations continue to exist.
Holding companies companies that own part or all of other companies' stock.
Short-form merger A merger between a subsidiary corporation and a parent corporation that owns at least 90% of the outstanding shares of each class of stock issued by the subsidiary corporation. Can occur without the approval of the s/h of either corporation.
Subsidiary corporation A corporation that wholly owned by another corporate entity (the parent corporation).
Surviving corporation The remaining, or continuing, corporation following a merger. The surviving corporation is vested with the merged corporation's legal rights and obligations.
Takeover The acquisition of control over a corporation through the purchase of a substantial number of the voting shares of the corporation.
Target corporation The corporation to be acquired in a corporate takeover; a corporation to whose shareholders a tender offer is submitted.
Tender offer An offer to purchase made by one company directly to the shareholders of another (target) company; often referred to as a takeover bid.
Created by: turquoisecat