llcs-corporations-partnerships

Definition

The duty of good faith stands for the principle that directors and officers of a corporation in making all decisions in their capacities as corporate fiduciaries, must act with a conscious regard for their responsibilites as fiduciaries. A violation of the duty of good faith may include an intentional derelict in the usual duties of an director or officer, intentionally acting for a purpose other than the benefit of the corporation, or intentionally violating the law.

Definition

The duty of loyalty stands for the principle that directors and officers of a corporation in making all decisions in their capacities as corporate fiduciaries, must act without personal economic conflict. The duty of loyalty can be breached either by making a self-interested transaction or taking a corporate opportunity.

See: Self-dealing.

See: Corporate opportunity.

Definition

Owner of a sole proprietorship. See: Sole proprietorship.

Definition

Security interest on property that cannot be satisfied until security interests with greater priority are paid back in full first.

See also

• Lien
• Senior lien

Definition

Also called a quasi-corporation. See quasi-corporation.

Illustrative caselaw

See, e.g. Pleasant Tp. v. Aetna Life Ins. Co., 128 U.S. 67 (1891).

See also

• Municipal corporation

• Public corporation

   

Definition

Stock that confers the holder a right to be paid first, before common (non-preferred) stockholders in the event of a dividend or liquidation payout, and additionally the right to also participate along with the common stockholders in receiving payment on the remaining payout.

See also

• Common Stock
• Preferred Stock

Definition

See Naked Option.

Definition

An option contract where the seller actually owns the underlying shares at the time of contract.

See also

• Option
• Naked option

Definition

The positive gain from an investment after subtracting all expenses.

Definition

Operating costs of a business, which are tax deductible. To qualify as a business expense, the cost must be ordinary, accepted and common in that business' trade and necessary, appropriate and useful in operating the business.

See also

• Deduction