Amended Certificate of Authority: A document issued by a state to a foreign corporation evidencing that the corporation has amended its original certificate of authority.

Amendment: Any change made to the existing provisions of Articles or Bylaws of a corporation by the directors or stockholders.

Annual List: The list of officers (President, Secretary, Treasurer, and one Director) that is required by the Nevada Secretary of State, to be filed annually.

Annual Meeting: A compulsory yearly meeting of shareholders at which directors are elected and other general business of the corporation is conducted.

Annual Report: A required annual filing in a state, usually listing directors, officers and financial information; an annual statement of business and affairs furnished by a corporation to its shareholders.

Apostille: Official government authentication of a document, usually by the State Department, which legalizes it for use in another country.

Application for Certificate of Authority: The form filed in many states to qualify a corporation to transact business as a foreign corporation.

Arm's Length Relationship: A term used to describe a type of business relationship a corporation should have with a close associate to avoid a conflict of interest.

Articles of Incorporation: A formal document that creates a corporation. Spells out how the corporation is structured under the laws of the state where it is organized.

Articles of Organization: A document filed to register a Limited Liability Company with the state.

Assumed Name: A name, other than a true name, under which a corporation conducts business. See also; Fictitious Name, DBA.

Authorized Shares: The maximum number of shares that a corporation may issue pursuant to its articles of incorporation.

Basis: A tax and accounting term, it is the point against which profit or loss is measured. When pertaining to stock, it is the price you pay for stock or the fair market value of property you contribute in exchange for stock.

Bearer Instrument: An order to pay the bearer when, by its terms, it is payable to; 1) a bearer or the order of a bearer; 2) a specified person or bearer; or 3) "cash" or the order "cash," or any other indication that does name a specific payee. Bearer shares are a common example of a bearer instrument.

Beneficiary: The person(s) for whom the trust was established. The beneficiary will receive the asset, or the benefit of the asset, at a particular time, established by the Grantor.

Blue Sky Law: A term used to describe state laws governing the issue and sale of securities to state residents and the licensing and regulation of securities brokers/ dealers.

Board of Directors: Governing body, elected by shareholders, to oversee the management of a corporation.

Bond: A long-term debt secured by a mortgage on real property or a lien on other fixed assets.

Business Corporation Act: A collection of laws in each state that governs corporations.

Bylaws: Rules adopted by an organization chiefly for the government of its members and the regulation of its affairs. They explain the operation of the corporation and the function of its various parts.

C Corporation: A corporation that pays tax on its own income under the general rules of Subchapter C of the Internal Revenue Code.

Capital Stock: The number of shares of a corporation, available to individuals (perhaps entities) that indicate ownership of a corporation. The number of shares authorized is established by the Secretary of State of the state of incorporation.

Certificate of Authority: A document provided by most states, showing that a Foreign Corporation has been registered to transact business in that state.

Certificate of Existence: See Certificate of Good Standing

Certificate of Good Standing: A document required by most states, when registering a corporation to do business in that state. It is issued by the state of incorporation.

Certificate of Incorporation: The document filed in many states to create a corporation. (See also; Articles of Incorporation).

Charging Order: An assignment of a partner’s economic right to distribution from a business entity ordered by a court. It has been described as a “business garnishment”.

Charter: A formal document that shows that a corporation exists. It is issued by the Secretary of State, to evidence the corporation has been properly filed.

Close Corporation: A corporation that elects to be registered under the close corporation statutes of their state of incorporation.

Closely Held Company: A company whose shares are held mostly by a small group of investors, management, founders, and/or family members and is not traded on a stock market.

Commingle: Is the act of sharing or pooling of corporate with personal assets. It is a way to become personally liable for corporate acts.

Common Stock: All capital stock except for preferred stock. The stock is held by the shareholders; usually has voting rights.

Compliant: A term referring to a level of meeting of a legal business entity's responsibilities to maintain the formalities of corporate existence under the laws of the jurisdiction in which it is formed.

Consent Resolution: Is any resolution signed by all directors or shareholders, which authorizes a particular action. This act eliminates the need for face-to-face meetings.

Consideration: (1) Something of value, such as money or personal services, given by one party to another in exchange for an act or promise. (2) Something promised, given, or done that has the effect of making an agreement a legally enforceable contract.

Consolidation: The statutory combination of two or more corporations to create a new corporation.

Constituent: A party to a transaction; a corporation involved in a merger, consolidation or share exchange.

Contract Creditors: People/ businesses to which you owe money or property because of a written or verbal contractual agreement.

Convertible Security: One that may be exchanged by the holder for another type of security.

Corporate Charter: See Articles of Incorporation.

Corporate Indicator: The word, or an abbreviation of a word, that must be included in a corporation's name to indicate that entity is a corporation. The list of acceptable terms will vary according to the jurisdiction in which the corporation is registered.

Corporate Kit: The name given to a package of materials needed when setting up a corporate record book. It usually includes sample minutes and bylaws, stock certificates, a corporate seal and stock ledger.

Corporate Seal: A device used to emboss the name of a corporation on official documents such as stock certificates.

Corporation: A body formed and authorized by law to act as a single person, although constituted by one or more persons, and legally endowed with various rights and duties, including the capacity of succession.

Corporation Law: The statutory provisions of a state relating to domestic and foreign corporations.

Cumulative Voting: A procedure used for electing directors. Shareholders are entitled to multiply the number of votes they are entitled to cast by the number of directors for whom they are entitled to vote. They then cast the product for a single candidate, or distribute the product among two or more candidates.

DBA: "Doing business as". See also; Fictitious Name, Assumed Name.

Debenture: A long-term debt issued mainly to evidence an unsecured corporate debt.

Debt Financing: A method of raising capital in which a corporation borrows money.

Derivative Suit: A lawsuit brought by a shareholder on behalf of a corporation.

Director: A person elected by the shareholders to oversee the management of a corporation.

Directors: The individuals who, acting as a group known as the board of directors, manage the business and affairs of a corporation.

Dissenters Right: Granted to shareholders entitling them to have their shares appraised and purchased by the corporation if the corporation enters into certain transactions that the shareholders do not approve of.

Dissolution: The statutory procedure that terminates the existence of a domestic corporation.

Distribution: A transfer of money or other property made by a corporation to a shareholder in respect of the corporation's shares owned by the shareholder.

Dividend: Corporate after tax profits that are distributed to the shareholders of a corporation.

Double Taxation: Taxation by the federal government of corporate earnings once at the corporate level and again at the shareholder level upon distribution of dividends.

Duration: The length of time that a business will be recognized as a corporate entity. e.g. perpetual, 30-year etc.

EIN: The tax identification number, issued by the IRS, to each business entity. It is the number the corporation uses to open bank accounts and conduct business; the number that separates the corporation from the individual’s social security number.

Employment Agreement: A contract between a corporation and an employee. They can be written or verbal; although all employment agreements should be in writing.

Encumbrance: A burden on either title to property or on the property itself (e.g., a mortgage, a lien).

Equity Financing: A method of raising capital in which a corporation sells shares of stock.

Equity Interest: An ownership interest; the interest of a shareholder as distinguished from that of a creditor.

Family Limited Partnership: A term that refers to a limited partnership formed to hold the family business or investment, on the premise that parents will make gifts of their limited partnership interests to their children. They are attractive as vehicles to obtain discounts for federal gift and estate tax planning purposes as well as for asset protection.

Fictitious Name: A name, other than a true name, under which a corporation or other business organization conducts business. See also; Assumed Name, DBA.

Fiduciary Relationship: A relationship in which one party (the fiduciary) must act in good faith and with due regard to the best interests of the other party or parties.

Foreign Corporation: A corporation carrying on business in any state other than the state of its creation; in all such states, it is ‘foreign’.

Foreign File: To registering a corporation to do business in any state other than the state of incorporation. All states look at corporations formed outside their boundaries as foreign corporations, and require them to register in their state, to transact business there.

Fractional Share: Ownership in a corporation in an amount less than a full share.

Franchise Tax: A tax or fee usually levied annually upon a corporation, limited liability company or similar business entity for the right to exist or do business in a particular state.

Fraudulent Conveyance: A contractual misrepresentation of the nature, quality, or existence of transferred assets; a term that denotes potential risk for sellers and lenders.

General Partnership: A partnership in which there are no limited partners, and each partner has managerial power and untitled liability for partnership debts.

Going Public: The process by which a corporation first sells its shares to the general public and thereafter trades its shares on a stock market.

Good Standing: Is when a corporation has remained current with the necessary reports and fees required by the regulatory jurisdictions under which it operates.

Grantor: The person gifting an asset to a trust.

Hague Convention: Since October 5, 1961, abolished the requirement of legalization for foreign public documents, and established a basic certification of public documents, outside the country of origination.

Hostile Takeover: Is a takeover that occurs without the approval of the target corporation's board of directors.

Incorporation: The act of creating or organizing a corporation under the laws of a specific jurisdiction.

Incorporator: The person(s) who perform the act of incorporation and who sign the articles of incorporation and deliver them for filing.

Indemnification: Financial protection provided by a corporation to its directors, officers and employees, against expenses or liabilities incurred by lawsuits alleging a breach of some duty in their service to or on behalf of the corporation.

Involuntary Dissolution: Termination of a corporation's legal existence through administrative or judicial proceeding; a dissolution forced rather than decided upon.

Irrevocable Trust: A trust in which the assets, once contributed, MUST remain. The trustee cannot be related to the grantor, and it becomes the trustee’s responsibility to “preserve” the assets of the trust, until the distribution to the beneficiaries.

Judgment - Proof: Having few, if any, assets that can be reached by a judgment creditor; thus, persons against whom money judgments are of no practical effect.

Judicial Dissolution: Involuntary dissolution of a corporation by a court at the request of the state attorney general, a shareholder or a creditor.

Jurat: Specific notary language citing, under oath, that a signature has been witnessed.

Land Trust: A revocable trust that is specifically designed to hold the title to real property.

Legalization of Certified Documents: Needed for overseas companies outside the Hague Convention and will not benefit from an Apostille.

Limited Liability: Liability (as a stockholder) limited by statute or treaty.

Limited Liability Company (LLC): A “hybrid” legal entity formed by state statute, it combines the characteristics of a corporation (limited liability for members and managers) with the tax advantages and flexibility of a partnership. An LLC can be used to own property and conduct any type of business. Non-U.S. citizens, corporations, trusts or Family Limited Partnerships can also own LLCs.

Limited Partnership: A partnership where one party acts as the general partner, and has control of the partnership, and is responsible for the liabilities of the partnership. Other parties are limited partners. They are investors in the partnership and share in the profits of the company, but are limited in losses to what they contributed to the partnership.

Limited Personal Liability: The protection afforded to a shareholder, limited partner or a member of a Limited Liability Company from debts or other liabilities of the company.

Living Trust (or “inter vivos” trust): is a trust created during a person’s lifetime, rather than one created upon death under the terms of a will. A ‘Grantor’ establishes it, ‘Trustees’ administer it and ‘Beneficiaries’ enjoy the results. Different types can help avoid probate, reduce estate taxes or set up long term property management.

Living Trust Estate Plan: A legal entity consisting of several elements: the living trust agreement itself, a pour-over will, personal property memorandum, powers of attorney and advanced health care directive

Majority: The percentage of votes required to approve certain corporate actions, i.e. more than 50%.

Management: The board of directors and executive officers of a business entity.

Managers: Individuals responsible for the maintenance, administration and management of the affairs of a limited liability company. Specific duties of managers may be detailed in the articles of organization or the operating agreement of the Limited Liability Company.

Members: Owner(s) of a Limited Liability Company. Unless the articles of organization or operating agreement provide otherwise, management of a Limited Liability Company is vested in the members in proportion to their ownership interest in the company.

Membership Certificates: Evidence of ownership / membership in a Limited Liability Company.

Merger: Statutory combination of two or more corporations in which a single corporations survives and the others cease to exist.

Minutes: A written record of transactions taken, or authorized by, the board of directors or shareholders. These are usually kept in the corporate record book.

Name Registration: The filing of a document in a 'foreign' state to protect the corporate name, often in anticipation of qualification in the state.

Name Reservation: A procedure that allows a corporation to obtain exclusive use of a corporate name for a specified period of time.

No Par Value Shares: Shares for which the articles of incorporation do not fix a par value that may be issued for any consideration determined by the board of directors.

Not-for-Profit Corporation: A corporation organized for some socially beneficial purpose, rather than for the direct monetary benefit of the directors or members. Also known as a non-profit corporation.

Notice of Litigation: See Notice of Service of Process

Notice of Service of Process: Official notification of an action or proceeding by the delivery of a legal or court document, with a request to answer in a specific period of time.

Officers: Individuals, appointed by the board of directors, responsible for carrying out the board's policies and for making day-to-day decisions.

Operating Agreement: A contract among the members of a limited liability company governing the membership, management, operation and distribution of income of the company.

Organizational Meetings: Meetings of incorporators, or initial directors, that are held after the filing of the articles of incorporation to complete the organization of the corporation.

Organizer: The individual(s) who perform the act of forming a Limited Liability Company, Limited Liability Company or Limited Partnership.

Par Value: A minimum price of a share below which the share cannot be issued, as designated in the articles of incorporation.

Par Value Stock: Stock for which a specified monetary amount is indicated on the share certificate; the par value must be set out in the articles of incorporation.

Parent Corporation: One corporation that owns a controlling interest in another corporation.

Partnership: The association of two or more persons who have expressly or implicitly agreed to carry on, as co-owners, a business for profit. In a general partnership all partners bear responsibility for all of the partnership liabilities.

Partnership Agreement: The document that details the arrangement between the partners. Any type of partnership will have a partnership agreement.

Partnership Certificates: The documents that are given to the partners in a partnership to indicate their percentage of ownership of the partnership.

Passive Income: Income to certain taxpayers that is subject to the passive activity loss rules because the taxpayer does not materially participate in the business activity producing the income. This generally includes receipts from royalties, rents, dividends, interest, annuities, and the sale and exchange of stock and securities.

Pass-Through Taxation: Tax is “passed through” to the individual shareholders in S Corporations and Limited Liability Companies. Income or losses are declared on individual tax returns instead of tax being levied on the income of the entity.

Perpetual Existence: Unlimited term of existence; characteristics of most business corporations.

Pierce the Corporate Veil: To disregard the corporate entity and thus hold the shareholders liable for corporate actions. This is possible under circumstances involving fraud and, in many states, if corporate formalities are not maintained.

Pour-Over Will: A safety net to catch anything that may have been left out of a living trust (intentionally or inadvertently) on the day of death. The pour-over will passes these miscellaneous assets into a trust for distribution in accordance with its specific directions.

Power of Attorney: A legal document that empowers a nominated individual to act on someone else’s behalf. Separate powers of attorney can be used for health care decisions and for financial management.

Preemptive Rights: The right of a shareholder to subscribe ratably for his/ her proportion of any additional shares issued by a corporation.

Preferred Stock: As detailed in the articles of incorporation, this separate class of stock has guaranteed priority over common stock in the payment of dividends and usually in the distribution of assets.Typically preferred stock carries no voting rights

Professional Corporation: A corporation created by a professional or professionals in order to gain corporate tax advantages for traditional partnership or proprietary activities.

Promoter: One who generates interest and activity in, and on behalf of, a corporation before its formation. A promoter is personally liable for all pre-incorporation activities.

Proxy: A written authorization given by a person to another party directing the party to vote on behalf of him/her.

Qualification: The filing of required documents by a corporation to secure a certificate of authority to conduct its business in a state other than the one in which it was incorporated. Limited liability companies or similar business entities may also conduct this process.

Quorum: A majority of the stockholders, or directors, necessary to be able to hold a meeting.

Record Date: The date for determining the shareholders entitled to vote at a meeting, receive dividends, or participate in any corporate action.

Redeemable Shares: Shares subject to purchase by the corporation on terms set forth in the articles of incorporation.

Registered Agent: A person or other entity authorized to receive service of process and other official papers for a corporation.

Registered Office: The statutory address of a corporation. In states requiring the appointment of a Registered Agent, it is usually the address of the Registered Agent.

Regulations: Administrative rules which have the force and effect of laws. Government agencies promulgate rules. If you don't comply, you are subject to the possibility of fines or revocation of the corporate charter.

Reinstatement: Returning a corporation that has been administratively dissolved or had its certificate of authority revoked, to good standing on a state's records.

Resolution: A written decision by the directors or shareholders of a corporation, to take a particular course of action.

Restated Articles of Incorporation: A document that combines all currently operative provisions of a corporation's articles of incorporation and amendments thereto.

Revised Model Business Corporation Act: A statute compiled by the American Bar Association that has been adopted in whole or in part by, or has influenced the statutes of many states.

Revocable Trust: A trust in which the grantor can add, or remove, or change the assets. The beneficiaries can also be changed.

S Corporation: A corporation that is eligible and elects to be taxed under Subchapter S of the Internal Revenue Code. Basically, shareholders pay tax on the corporation’s income by reporting their pro-rated shares of pass-through items on their own individual income tax returns.

Scrip: A form used to represent ownership of fractional shares in lieu of issuing share certificates.

Securities Laws: State and federal laws that govern the issuance, sale and transfer of stocks and bonds.

Security: A contract between a business and an investor whereby the investor supplies money and experts to profit from his or her investment.

Service of Process: See Notice of Service of Process

Share: The unit into which the ownership interest in a corporation is divided.

Share Exchange: A statutory form of business combination in which some, or all, of the shares of one corporation are exchanged for some, or all, of the shares of another and neither cease to exist.

Shareholder: An owner of a share of a corporation through the ownership of its stock; also known as stockholder.

Shareholder Agreement: An agreement among the shareholders of a corporation. It usually addresses the issuing of additional shares of stock, the selling of the shareholders personal stock, and the succession of the company.

Short - Form Merger: The statutory merger of a subsidiary into its parent corporation in which shareholder approval is not required.

Sole Proprietorship: A simple form of business in which a sole owner and his or her business are not legally distinct entities; the owner is personally liable for business debts.

Special Meeting: A shareholder meeting allowing them on the specific matters stated in the notice of the meeting.

Statutes: Laws passed by the state legislature or U.S. Congress. Statutes often authorize an administrative agency to declare regulations which are used to supplement the statute. In the event of a conflict, statutes override regulations.

Stock: A share; the aggregate of corporate shares; the physical evidence of share ownership, the share certificate.

Stock Certificate: A document evidencing ownership of one or more shares of the capital stock of a corporation (also called a share certificate).

Stock Purchase Agreement: An agreement between shareholders and the corporation providing a mechanism to regulate the transfer and sale of corporate stock.

Stockholder: An owner (of stock) of a corporation; determined by the shares of stock they hold; same as shareholder.

Subscribers: Individuals who agree to purchase shares in a corporation under pre-determined conditions.

Subscription: The agreement executed by a subscriber.

Subsidiary: A business entity that is either owned or controlled through ownership of a majority of its voting shares by another entity.

Takeover: A merger, acquisition or other change in the controlling interest of a corporation.

Target: A corporation that is the focus of a takeover attempt.

Tax - Exempt Organization: One that is determined by the Internal Revenue Service to be exempt from federal taxation of income.

Tort: Any act (or failure to act, if there was a duty to act) which causes harm or damage. e.g. fraud, misrepresentation, negligence, etc..

Trademark: A word or mark that distinctly indicates the ownership of a product or service, and that is legally reserved for the exclusive use of that owner.

Treasury Shares: Shares of a corporation reacquired by that corporation.

Trust: A trust is a vehicle by which one party, the Grantor, can give an asset to a third party, the Trustee, to hold for the benefit of another party, the Beneficiary.

Trustee: The person who has a legal responsibility to carry out the directions given by the Grantor.

Underwriter: A company that purchases shares of a corporation and arranges for their sale to the general public.

Voluntary Dissolution: Decision and action by shareholders, incorporators or initial directors to dissolve a corporation.

Voting or Pooling Agreement: An agreement, preferably in writing, of two or more shareholders to use their shares to vote in a particular manner.

Voting Rights: Rights of shareholders to vote their shares pursuant to provisions of statutes, the articles of incorporation and the bylaws.

Voting Trust: An agreement among the shareholders of the corporation. Under a voting trust, shareholders transfer their shares of stock to a trustee in exchange for voting trust certificates. The trustee votes the shares in the manner directed in the voting trust agreement. Voting trusts are often used to preserve control of the corporation.

Watered Shares: Shares that have been issued for a consideration less than the par, or stated, value of the shares.

Winding Up: The discharging of a corporation's liabilities and the distributing of assets as part of its dissolution.

Withdrawal: A statutory procedure whereby a foreign corporation obtains the consent of a state to terminate its authority to transact business there.