Chapter 14: Business Organizations

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  1. Alien corporation
    A corp. created under the authority of a foreign company
  2. Alter-ego theory
    One method used by courts to pierce the corporate veil when a shareholder fails to treat the corporate org. as a separate legal entity
  3. Articles of incorperation
    The legal doc. that forms the app. for a state charter of incorp.
  4. Articles of incorporation
    The doc. used to create a LLC. Its purpose corresponds to the purpose of the articles of partnership and the articles of incorporation.
  5. Articles of partnership
    Another name for a formally drafted partnership agreement
  6. Assumed-name statue
    A state law that required partners to make a public filing of their identities if their partnership operates under a name that does not reveal the partner's identities
  7. Benefit corporation
    A corp. form that requires directors to ensure that the corp. meets explicit social goals in addition proof the the doc.'s contents
  8. Buy and sell agreement
    A contract, usually among partners. but perhaps among shareholders, wherein one party agrees to buy the ownership interest held by another party or the first party agrees to sell such an interest to the other party. These contractual provisions help provide for a transition of owners without harming the business of the org.
  9. Charter
    The legal document issued by a state when creating a new corp.
  10. Closely held
    An org. that is owned by by only a few people
  11. Corporation
    An artificial, but legal, person created by state law. As a business org., the corp.'s separation of owners and managers gives it a high level of flexibility
  12. Derivative suit
    A lawsuit filed by a shareholder of a corp. on behalf of the corp. This action is filed to protect the corp. from the mismanagement of its officers and directors.
  13. Directors
    Those individuals who are elected by the shareholders to decide the goals and objectives for the corporate organization
  14. Dissolution
    The cancellation of an agreement, thereby rescinding its binding force. A partnership is dissolved anytime there is a change in partners. A corp.'s dissolution occurs when the business entity ceases to exist.
  15. Domestic corporation
    A business org. created by the issuance of a state charter that operates in the state that issued the charter
  16. Double tax
    A disadvantage of a corporation from of org. in that the corp. must pay a tax on the money earned and the shareholder pays a second tax on the dividends distributed
  17. Foreign corporation
    A business organization, created by the issuance of a state charter, that operates in states other than the one issuing the charter
  18. Double tax
    A disadvantage of a corporation from of org. in that the corp. must pay a tax on the money earned and the shareholder pays a second tax on the dividends distributed
  19. Foreign corporation
    A business organization, created by the issuance of a state charter, that operates in states other than the one issuing the charter
  20. General partners
    The owners of a LP that enjoys the controls of the partnership's operation. This type of partner is personally liable for the debts of the limited partnership
  21. Incorporator
    Those individuals who are responsible for bringing a corp. into being
  22. Jointly and severally liable
    The legal principle that makes 2 or more people, usually partners, liable for an entire debt as individuals or in any proportional combination
  23. Limited liability company (LLC)
    A type of business org. that has characteristics of both a partnership and a corporation. The owners are called members, and their personal liability is limited to their capital contributions. The org. is not a taxable entity.
  24. Limited liability partnership
    A hybrid business partenrship
  25. Limited partner
    Those owners of a LLP who forgo control of the org.'s operation in return for their liability being limited to the amount of their investment
  26. Limited personal liability
    The term is used to describe the exposure of business to pay the debts of their business when such exposure does not exceed the owner's investment in the business
  27. Managers
    A person designated and charged with day-to-day operations of a LLC
  28. Members
    The individuals or business entities that belong to a LLC
  29. Officer
    Those individuals appointed by the directors of a corp. to conduct the daily operations of the corporate organization
  30. Organizer
    The parties responsible for bringing a LLC into existence. These parties correspond to the functions of incorporators with respect to corporations
  31. Partnership
    A business org involving to or more persons agreeing to conduct a commercial venture while sharing its profits and losses
  32. Piercing the corporate veil
    The legal doctrine used by courts to disregard the existence of a corporation, thereby holding the shareholder's personably liable for the organization's debts
  33. Proxy
    The legal documents that limits can actor's liability to consequences that could reasonably be foreseen to have resulted from the act
  34. Publicly held
    A business organization that has hundreds, if not thousands, of owners who can exchange their ownership interests on public exchanges
  35. S corporation
    A business organization that is formed as a corporation but, by a shareholder's election, is treated as a partnership for taxation purposed
  36. Shareholder
    The owners of corporations. Typically these owners vote on major decisions impacting their corporations, most commonly the election of a board of directors.
  37. Sole proprietorship
    The simplest form of business organization, created and controlled by one owner
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Chapter 14: Business Organizations
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