Chapter 36 Law and Finance Final

involuntary dissolution of a corporation that is ordered by the secretary of state if a corporation has failed to comply with certain procedures required by law

a corporation that is incorporated in another country

• the amount of unpaid cumulative dividends
• can be accumulated for only a limited period of time.

amendment to the articles of incorporation without shareholder approval if the amendment does not affect rights attached to shares, this must be filed with SoS

for a voluntary dissolution to be effective, this must be filed with the secretary of the state of incorporation. corporation is dissolved on the effective date of the articles of dissolution.

• the basic governing document of a corporation. It must be filed with the secretary of state of the state of incorporation
• must include
• name of the corporation
• number of shares the corporation is authorized to issue
• the address of the corporation's initial registered office and the name of the initial registered agent
• name and address of each incorporator

the number of shares provided for in the articles of incorporation

a panel of persons who are elected by the shareholders that makes policy decisions concerning the operation of a corporation

a long-term debt security that is secured by some form of collateral

a detailed set of rules adopted by the board of directors after a corporation is incorporated that contains provisions for managing the business and the affairs of the corporation

A corporation that does not qualify for or has not elected to be taxed as an S corporation. there is double taxation; a C corporation pays taxes at the corporate level and shareholders pay taxes on dividends paid by the corporation

management composed of the board of directors and officers of the corporation

• when a foreign corporation is required to qualify to conduct intrastate commerce in a state, it must require this.
• this requires the foreign corporation to file certain information with the secretary of state, pay the required fees, and appoint a registered agent for service of process

In an administrative dissolution, if the corporation does not cure the default within 60 days of being notified of it, the secretary of state issues this that dissolves the corporation

• 1. free transferability of shares
• 2. perpetual existence
• 3. centralized management

a small corporation that has met specified requirements and has selected to be a close corporation under state law. As such, the corporation may dispense with many corporate formalities.

a corporation owned by one or a few shareholders

a type of equity security that represents the residual value of a corporation

a person who owns a common stock

stock that permits the preferred stockholders to convert their shares into common stock

board of directors and corporate officers

employees of a corporation who are appointed by the board of directors to manage the day to day operations of the corporation

design that contains the name of the corporation and the date of incorporation

a fictitious legal entity that is created according to statutory requireements

state statutes that regulate the formation, operation, and dissolution

stock for which any missed dividend payments must be paid in the future the common shareholders can receive any dividends

a long-term unsecured debt instrument that is based on a corporation's general credit standing.

securities that establish a debtor-creditor relatioship in which the corporation borrows money from the investor to whom a debt security is issued.

If a court dissolves a corporation, the couort enters this specifies the date of dissolution

when a corporation will stop doing business and cease operations and will no longer be in business.

when common stockholders vote on mergers and other important matters, they receive dividends declared by the board of directors.

a corporation in the state in which it was formed

representation of ownership rights to a corporation

• powers given to a corporation by
• 1. the U.S. Constitution
• 2. state constitutions
• 3. federal statutes
• 4. state statutes
• 5. articles of incorporation 
• 6. bylaws
• 7. resolutions of the board of directors

receiving dividend on a fixed schedule

A stockholder purchases $10,000 of a preferred stock that pays an 8 percent dividend annually. The stockholder has the right to receive $800 each year as a dividend on the preferred stock

A corporation created to conduct a business for profit that can distribute profits to shareholders in the form of dividends

a corporation in any state or jurisdiction other than the one in which it was formed

by a shareholder by sale, assignment, pledge, or gift unless they are issued pursuant to certain exemptions from securities registration

permit corporations to be formed without the separate approval of the legislature

• considering social issues and protecting the environment
• like reducing carbon footprint, engaging in sustainability efforts, etc...

a clause that can be included in the articles of incorporation that permits the corporation to engage in any activity permitted by law

a corporation formed to meet a specific governmental or political purpose

powers beyond express powers that allow a corporation to accomplish its corporate purpose

organization of a corporation must comply with the state's corporation code to form a corporation.

a party who signs the articles of incorporation of a corporation

a contract between a corporation and a holder that contains the terms of a debt security

authorized shares that have been sold by a corporation

dissolution of a corporation through a court proceeding insitututed by the state

corporations are seperate legal persons for most purposes.

a general rule of corporate law that provides that generally shareholders are liable only to the extent of their capital contributions for the debts and obligations of their corporation and are not personally liable for the debts and obligations of the corporation

a clause that can be included in the articles of incorporation that stipulates the activities that the corporation can engage in. the corporation can in no other purposes or activities

the right to be paid a stated dollar amount if a corporation is dissolved and liquidated

A corporation issues a preferred stock that has a liquidation pref-erence of $200. This means that, if the corporation is dissolved and liqui-dated, the holder of each preferred share will receive at least $200 before the common shareholders receive anything. Note that because the corpora-tion must pay its creditors first, there may be insufficient funds to pay this preference.

provides uniform law regulating the formation, operation, and termination of corporation.

local governments corporations, like water, school, sewage, and park districts

• shares not assigned par value
• most shares

• preferred stock that does not have a conversion feautre
• is more common than convertible stock

there is no right to accumulation. the corporation does not have to pay any missed dividends.

• does not give the holder a right to participate in the profits of the corporation beyond the fixed dividend rate. 
• most preferred stock falls into this category

• prefferred stock that is not redeemable
• more common

a corporation formed to operate charitable institutions, colleges, universities, and other entities. These corporations have no shareholders

a debt security with a maturity of 5 years or less.

three party agreement in which the corporation agrees to assume the contractual liability of the promoter with the consent of the third party.

a meeting that must be held by the initial directors of a corporation after the articles of incorporation are filed

shares that are in shareholder hands, whether originally issued shares or reissued treasury shares. Only outstanding shares have the right to vote.

common stock on which the corporation has set the lowest price at which the shares may be issued by the corporation.

stock that allows the preferred stockholder to participate in the profits of the corporation along with the common stockholders

corporations exist in perpetuity unless a specific duration is stated in a corporation's articles of incorporation.

a type of equity security that is given certain preferences and rights over common stock

a person who owns preferred stock

P.A.

a corporation formed by lawyers, doctors, or other professionals

a person or persons who organize and start a corporation, negotiate and enter into contracts in advance of its formation, find the initial investors to finance the corporation, and so forth.

a collective term for such items such as leases, sales contracts, contracts to purchase property, and employment contracts entered into by promoters on behalf of the proposed corporation prior to its actual incorporation

include leases, sales contracts, contracts to purchase real or personal propertym employment contracts, and the like

• follows these rules
• • If the corporation never comes into existence, the promoters have joint per-sonal liability on the contract unless the third party specifically exempts them from such liability.

• If the corporation is formed, it becomes liable on a promoter’s contract only if it agrees to become bound to the contract. A resolution of the board of direc-tors binds the corporation to a promoter’s contract.

• Even if the corporation agrees to be bound to the contract, the promoter remains liable on the contract unless the parties enter into a novation, a three-party agreement in which the corporation agrees to assume the contract liability of the promoter with the consent of the third party. After a novation, the corporation is solely liable on the promoter’s contract

a corporation that requires directors and officers to make decisions to accomplish general-public benefits and stipulated specific public benefit purposes stated in the articles of incorporation and to consider stakeholders other than shareholders, such as employees, consumers, suppliers, and the community, when making corporate decisions.

a corporation that has many shareholders and whose securities are often traded on national stock exchanges

stock that permits a corporation to buy the preferred stock at some future date

a person or corporation that is empowered to accept sevice of process on bahalf of a corpoation

a 1984 revision of the MBCA that arranges the provisions of the act more logically, revises the language to be more consistent and makes substantial changes in the provisions.

A corporation that has met certain requirements and has elected to be taxed as an S corporation for federal income tax purposes. An S corporation pays no federal income tax at the corporate level. The S Corporation's income or loss flows to the shareholders and must be reported on the shareholders' individual income tax returns.

service areas on a corporate level

owners of a corporation who elect the board of directors and vote on fundamental changes in the corporation

• voting to become a close corporation
• to chose, 2/3 of the shares of each class of shares of teh corporation must approve the election.
• only corporations with 50 or fewer shareholders may elect this.

allow the shareholders of some corporation to avoid double taxation by electing subchapter S status

The end of a corporation that occurs after winding up the corporation's affairs, liquidating its assets, and distributing the proceeds and property to the claimants. 

• paid in according to the following priority:
• 1. expenses of liquidation and creditors according to their respective liens and contract rights
• 2. preferred shareholders according to their liquidation preferences and contract rights
• 3. common stockholders

issued shares that have been repurchased by the corporation. May not be voted by the corporation. Treasury shares may be resold by the corporation

an act by a corporation that is beyond its express  or implied powers

authorized shares that have not been sold by the corporation

dissolution upon recommendation of the board of directors and a majority vote of the shares entitled to vote of a corporation that has begun business or issued shares.

the process by which a dissolved corporation's assets are collected, liquidated, and distributed to creditors, preferred, shareholders, and common shareholders.

the right to receive a fixed dividend at stipulated periods during the year