Business Associations Glossary
Business Associations Glossary
Word Definition
Affiliate Someone who is controlling the company or under common control of some other company
Agency an agreement by one person (an agent) to act for a principal at the principalís direction and control
Agent Someone who is authorized to act on behalf of the principal
Beneficial title  
Bona fide purchaser Someone who gives consideration, acts in good faith, and who is not on notice of an adverse claim
C Corporation Any corporation that hasn't elected the status of an S corporation
Callable Can be redeemed at the option of the issuer
Capital Productive capacity: tangible assets (equipment and buildings), intangible assets (intellectual property and human capital), money
Come to rest  
Common stock Residual interest in a corporation: including the right to elect directors and receive dividends and distributions
Community property  
Contractual subordination  
Convertible Describes securities that include the right to exchange them at the option of the holder for a certain number of shares of another class of stock
Corporation by estoppel Doctrine that prevents personal liability for an obligation entered into in the name of a non-existant corporation
Cumulative voting Method of voting where each shareholder multiplies the number of shares owned by the number of seats on the board and can distribute those votes all to one candidate or spread them among several candidates, allowing minority shareholders to be represented on the board
De facto corporation A partially formed corporation that protects shareholders from personal liability; it can only be attacked by the state
De jure corporation A corporation sufficiently formed to be recognized as a corporation for all purposes, even though there may have been a few small flaws in its incorporation
Deadlock A situation where shareholders factions can block corporate action; often arises when there is a split between two factions over electing directors
Dividend A distribution to shareholders out of earnings
Equitable subordination  
Equity Ownership interest in a business venture, equal to assets minus liabilities plus amounts due to senior securities
Equity investor  
Ex dividend The date when it's too late to purchase shares of publicly traded stock and still receive a previously declared dividend
Executive stock options  
Family errand doctrine  
Fiduciary duty  
General partnership A partnership in which all partners are general partners
In blank  
Investment securities  
Limited liability corporation A business entity that has the limited liability benefits of a corporation with the tax benefits of a partnership
Limited liability partnership A type of general partnership with some limitation of liability under state law
Mutual companies  
Mutual funds A publicly held open end investment company which will redeem its shares at net asset value at any time
Not-for-profit association  
Not-for-profit corporation  
Poison pill  
Preemptive rights Rights that give existing shareholders the chance to buy part of a new issue of shares before the general public can, thus protecting them from dilution of value and control
Preferred stock Shares that have preferential rights to dividends or distributions over common stock
Professional corporations  
Promoter This is a person who brings together labor, capital, and management to start a business enterprise
Proxy Written permission to have another shareholder vote on your behalf
Proxy agent  
Quo warranto A proceeding to determine "by what right" someone holds a corporate office
REIT Real estate investment trust
Registered form  
Respondeat superior  
Revised Model Business Corporation Act  
Rule 10b-5  
Security title  
Shareholder derivative action  
Sole proprietorship  
State court receivership  
Stock transfer books  
Straight debt  
Straight voting  
Subchapter C  
Subchapter K  
Subchapter S  
Sweat equity A person who partners with a capitalist who doesn't have much money of his or her own, but has skills and the willingness to work hard
Tender offer  
Trustee in bankruptcy  
Ultra vires Beyond the powers of the corporation
Uniform Partnership Act  
Workers' compensation