Business, Chap 6

When one company completely buys out another company.

• Separation of ownership and management.
• Sets policy
• Makes major business and financing decisions
• Authorizes stock issuance
• Elects management team

• Federal Law
• states;  Board of Directors cannot ignore their responsibilities of managing the internal controls of a company without incurring risk of long prison sentences and huge fines.

• Reports to Board of Directors
• Responsible for entire operations of a corporation

• Reports to CEO
• Responsible for ;  Analyzing/Reviewing financial data
•                                Reporting financial performance
•                               Preparing budgets
•                                Monitoring expenditures and costs.

• Reports to CEO
• Responsible for day-to-day operations

• Business structured as a 'separate legal entity'
• Files separate tax returns
• Formed under state laws
• Protects the owners personal assests
• Can sue and be sued
• Requires much ongoing paperwork

as a separate legal entity, it is taxed at the entity level

• Taxed at the shareholder level
• Profit/Loss based on proportional interest of ea shareholder
• Shareholders must be U.S residents
• Can have no more than 100 Shareholders
• Can only have one class of stock

• Shareholders
• Board of directors
• Corporate Officers

• 1. Chose a Name
• 2. Appoint Directors
• 3.  File Articles of Incorporation
• 4.  Draft Bylaws
• 5.  Hold a Meeting of the Board
• 6.  Issue Stock
• 7.  Obtain Licenses and Permits

• Limited Liability
• Unlimited members
• Must dissolve when any member leaves, imposed by
•           state of formation.
• Distribution of profits determined by owner

Effect achieved when two companies combine.

Created when the new company, as a result of a merger or aquisition, can realize operation or financial economies of scale.