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Useful Terms


Assets - Anything owned with monetary value. This includes both real property and personal property.

Authorized Shares - The number of shares a corporation is authorized to sell.

By-Laws - Rules adopted for the regulation of a corporation’s own actions, by the corporation itself; a subordinate law adopted by a corporation, association or other body for its self-government or to regulate the rights and duties of its officers and members.

Calendar Year - The accounting year beginning on January 1 and ending on December 31.

Certificate / Articles of Incorporation - The document which creates a corporation according to the laws of the state. This must be filed and approved by the state.

Consolidation - When two corporations combine creating a third.

De Facto Corporation - An entity operating as a corporation but without the benefit of a formal charter.

De Jure Corporation - A lawfully chartered corporation.

Domestic Corporation - A corporation formed in one state to do most of its business in that state.

Fiscal Year - Any twelve month period used by a business as its fiscal accounting period. Such accounting period, may for example, run from July 1 of one year through June 30 of the next year.

Foreign Corporation - A corporation formed in one state or country but conducting some or all of its business in another state or country.

Holding Company - A corporation that has no function other than to own other corporations.

Incorporate - To form a corporation or to organize and be granted status as a corporation by following procedures as proscribed by law.

Incorporator - One who signs the Certificate/Articles of Incorporation petitioning the state for a charter.

Issued Shares - The number of shares actually sold by the corporation.

Merger - The absorption of one corporation by another.

Minority Stockholder - One who owns or controls less than 50% of the stock in a corporation.

Minutes - Written records of formal proceedings of stockholders and directors meetings.

Non-Par Value Stock - Shares of stock with out a specified value.

Not-for-Profit Corporation - A corporation organized for some charitable, civil, social or other purpose that does not entail the generation of profit or the distribution of its income to members, principals, shareholders, officers or others affiliated with it. Such corporations are accorded special treatment under the law for some purposes, including taxation.

Par Value Stock - Shares of stock with a specified value.

Pre-Emptive Rights - The rights of existing stockholders granting them first option to acquire new issues of stock in proportion to their present stock ownership.

Proxy - Authorization by a stockholder allowing another to vote his shares of stock.

Publicly-Owned Corporation - One whose stock is owned by large number (over 25) stockholders and is regulated by the SEC.

Quorum - A majority of the stockholders or directors necessary for vote counting and decision making at a meeting. While a quorum is usually a majority of the total membership or the members present, a quorum may consist of a greater number than a simple majority if desired and stated in the by-laws.

Shareholder - See “Stockholder”

Statutory/Registered Agent - A lawyer, corporation or individual who has assumed the responsibility to be the legal representative for the corporation in your state. The Statutory/Registered Agent is the legal agent of the Corporation, for purposes of accepting legal service.

S Corporation (Subchapter S Corporation) - A small business corporation which elects to be taxed as a partnership or proprietorship for federal income tax purposes. Individual shareholders enjoy the benefits under state law of limited corporate liability but avoid corporate federal tax.

Stock Certificate - Written instrument evidencing a share in the ownership of a corporation.

Stockholder - A holder of one or more shares of the stock of a corporation. A stockholder may be called a “shareholder”.

Subsidiary - A corporation owned by another corporation.

Treasury Stock - Shares of the corporation owned by the corporation.


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