Final 305

Pooling Agreement

Agreement among shareholders to vote their stock a certain way.

Preferred Stock

Usually nonvoting shares of a corporation entitling its holders to dividend preference above the common shareholders.

Professional Corporations

A statutory entity that permits professionals such as lawyers and doctors to incorporate and enjoy limited personal liability on all debts except for those arising from malpractice.

Proxy

Right (given in written form) to vote another’s shares.

Publicly Held Corporations

A corporation owned by shareholders outside the officers and employees of the firm.

Ratification

A principal’s recognition of a contract entered into by an unauthorized agent.

Revised Uniform Partnership Act

Newest uniform revision of law on limited partnerships.

S Corporation

A form of corporation for tax purposes that permits the direct flow-through of income and losses to the shareholders; no income tax on the entity and no personal liability for the owners for business debts

Sole Proprietorship

Method of business ownership in which one person owns business, receives all profits, and is personally liable for all debts.

Transfer Restrictions

Limitations on the resale of shares of a corporation.

Uniform Partnership Act (UPA)

Uniform law adopted in 49 states that governs the creation, operation, and termination of general partnerships.

Voting Trust

Arrangement among shareholders to gain uniform voting and some power by signing over voting rights on shares to a trustee; shareholders still get dividends, but trustee votes the shares; must be in writing and recorded with the corporation.

Watered Shares

Shares for which par value was not paid; shareholder is liable for the difference between what was paid and the par value per share.

Asset Acquisition

Form of takeover in which another firm buys all the assets of a firm and gains control through control of the firm’s property. If structured property, the acquirer avoid liability for the debts of the acquired business.

Blue-Sky Law

State law regulating sale of securities.

Comment/Deficiency Letter

SEC response to registration filing; requires additional information or clarification on proposed offering.

Consolidation

A form of merger in which two firms unite and become known by a new name.

Due Diligence

Under the Securities Act of 1933, a defense for filing a false registration statement that requires proof that the individuals involved did all they could to uncover the truth and could not have discovered the false statements despite a thorough review of all relevant information.

Exemption

Securities and transactions that do not have to be registered with the SEC under the Securities Act of 1933.

Foreign Corrupt Practices Act (FCPA

Federal law prohibiting bribes in foreign countries and requiring the maintenance of internal controls on accounting for firms registered under the Securities Exchange Act of 1934.