Term
|
Definition
| A company whose business activity consists of holding shares in another company. Normally established in a low-tax or no-tax off-shore jurisdiction. Profits from holding these funds off-shore are taxed where held minimally. Once cash comes back to the U.S. either in dividends or otherwise, they are taxed at the U.S. rate. |
|
|
Term
|
Definition
| A company doing business in its home state (state where it was first incorporated). |
|
|
Term
|
Definition
| Company that first incorporated in one state and is doing business in another state. |
|
|
Term
|
Definition
| Company incorporated in one country and doing business in another. |
|
|
Term
|
Definition
| Permission granted by a state that in which a company wishes to do business outside of its home state. |
|
|
Term
|
Definition
| Formed by the gov't to meet some political of gov't purpose. It is NOT the same as a publicly held corporation (public company). Examples are U.S. Postal service, AMTRAK, etc. |
|
|
Term
|
Definition
| created for private benefit. Owned by private persons rather than the gov't. |
|
|
Term
|
Definition
| Corps who's shares are held by members of a family or by relatively few persons. If all shareholders agree in writing, the company can operate without directors, bylaws, shareholder or director meetings, stock certificates and records of decisions. |
|
|
Term
| Shareholder agreement in close corps |
|
Definition
| Agreement stating that when a shareholder dies, the shares are divided equally among surviving shareholders. |
|
|
Term
|
Definition
| Can avoid taxation at the corporate level while retaining many benefits of a corporation such as limited liability. |
|
|
Term
| 6 Qualifications to form an S-Corp |
|
Definition
- Must be a domestic corp
- Corp must be a member of an affiliated group of corps.
- Shareholder must be individuals, estates, or certain trusts. Sometimes can be a corp.
- No more than 100 shares
- Only one class of stock
- No non-resident alien shareholders
|
|
|
Term
|
Definition
- Shareholders can use losses of the company to offset other taxable income
- When shareholder's tax bracket is lower than normal corporation tax bracket, s-corp can be taxed at the shareholder's rate.
|
|
|
Term
| Professional Corporations |
|
Definition
| Established by lawyers, doctors, dentist, etc. They enjoy tax and liability benefits like a regular corporation but can be held liable for misconduct of employees. Can't be held liable for torts (other than malpractice or breach of duty) committed by other professionals at the firm. |
|
|
Term
| 4 steps for incorporation of a business |
|
Definition
- Select a state of incorporation
- Secure a corporate name
- Create articles of incorporation
- File article with secretary of state
|
|
|
Term
| 4 Items that articles of incorporation must include |
|
Definition
- The name of the corporation
- Number of shares the corp is authorized to issue
- Name and address of corp's initial registered agent
- Name and address of each incorporator
|
|
|
Term
|
Definition
| Corporation has substantially complied with all conditions to incorporate. Ex. corp has article, but they list the wrong address. De Jure gives them protection from being said to not exist. |
|
|
Term
|
Definition
| Corp is unaware of some defect in the corp formation such as not holding the organizational meeting. Its existence can't be challenged by third persons, only by the state. |
|
|
Term
|
Definition
| Business that holds itself to be a corp but is not. Ex is if they enter a contract, but never filed articles in the past. |
|
|
Term
|
Definition
| Power found in the company articles |
|
|
Term
| Order of priority used in conflict among various documents involving a corp |
|
Definition
- US Constitution
- Constitution of the state of incorporation
- State statutes
- Article of Incorporation
- Bylaws
- Resolutions of the board of directors
|
|
|
Term
|
Definition
| "Beyond the Power" Acts that are beyond the power of the corp. Ex - CEO of a plumbing company contracts to buy cases of wine. Doesn't contribute to company progress. |
|
|
Term
| Piercing the Corporate Veil |
|
Definition
| Fraud or some other act is committed that exposes the company shareholders to personal liability. |
|
|
Term
| 4 instances where courts might pierce the corporate veil |
|
Definition
- Party is tricked into dealing with the corp rather than the individual.
- Corp is set up without capital and will never make a profit. Doomed from the start
- Statutes are not followed like holding required corporation meetings.
- Personal and corporate interests are commingled.
|
|
|
