Week 13: Business Structure Vocab

Advances

Loans by partners to the partnership, making the partner a creditor of the partnership.

Alter Ego Theory

Theory that disregards corporate protection of limited liability, applied when individuals treat corporation properties as their own.

Appraisal Rights

Rights of dissenting shareholders to be paid the value of their shares before a merger or takeover.

Articles of Incorporation

Organizational papers of a corporation listing its structure and other details.

Audit Committees

Committee of the board responsible for oversight of financial statements.

Business Judgment Rule

Required care by corporate board members in decision-making, requiring reasonable care but not foolproof judgment.

Common Stock

Shares in a corporation typically giving voting rights.

Corporate Opportunity Doctrine

Prohibition against directors profiting from opportunities that the corporation would have an interest in.

Corporate Veil

Personal liability shield for shareholders, directors, and officers, which can be pierced for improper conduct.

Cumulative Preferred Stock

Ownership type that provides preferential treatment in dividends and accumulates unpaid earnings.

Dissenting Shareholder

Shareholder who objects to a merger and votes against it, entitled to share value before the merger.

Dissolution

Termination of business relationships or corporate existence.

Dodd-Frank Act

Federal law enhancing regulation of financial markets and consumer protection.

Fiduciary

A position of trust and confidence.

General Partner

Partner whose personal assets are liable to partnership creditors.

Joint Ventures

Partnerships for a specific business activity.

Limited Liability Company (LLC)

A business entity providing limited liability with management participation allowed.

Limited Partnership

A partnership with general and limited partners, where some have unlimited liability.

Proxy

Written right to vote another’s shares.

Publicly Held Corporations

Corporations owned by shareholders outside the company's officers and employees.

S Corporation

A tax classification that allows for income flow-through to shareholders without entity-level taxation.

Tender Offer

An offer to purchase shares from more than 10 percent of a firm's shareholders, usually as part of a takeover.

Williams Act

Federal law governing the tender offer process.

Securities Exchange Act of 1934

Federal law regulating secondary sales of securities.

8-K Form

Filing required within ten days of a significant event affecting a registered company.

Fair-Disclosure Rule (Regulation FD)

Regulation requiring companies to distribute information to the entire market fairly.