llcs-corporations-partnerships

Definition

A person designated by another to attend a shareholders' meeting and vote on their behalf. A proxy can be revoked at any time by the grantor, unless it has been coupled with an interest.

Also short for a proxy statement, which is a written notice required to be sent by the corporation to the shareholders before voting by proxy, and includes such information as the issues to be voted upon and the names of directors up for election to the board.

See also

• Shareholders meeting
• Common stock

Definition

A formal written document that accompanies a new offering of a corporate security, meant to provide information to potential buyers of that security. It contains detailed information on the business' history, financial state, current business plans, the names of its directors and officers as well as any pending litigation it is involved in. The prospectus is usually an abridged version of the business' registration statement filed with the Securities and Exchange Commission (SEC).

Definition

The owner of a sole proprietorship. See sole proprietorship.

Definition

See sole proprietorship.

Definition

Stock issued to a promoter by a newly formed corporation as payment for the promoter's efforts in promoting the corporation, which may involve finding funding and new stockholders, entering into contracts or actually filing the charter on behalf of the corporation. Most states limit the amount of promotional stock that can be paid in exchange for the promoter's efforts, due to it not being issued in exchange for money or assets.

See also

• Promoter
• Stock

Definition

A promoter acts on behalf of a corporation before it is formed. The promoter may be, but doesn't have to be, the same person as the corporation's incorporator. The corporation will not be liable for any contracts entered into by the promoter on its behalf prior to incorporation unless it adopts the contract, either by direct action of the board of directors, or through implied action, by accepting the benefit of the contract.

Definition

Type of corporation, governed by state statute, that allows members of certain licensed professions to own stock in a corporation organized to render services in that profession. Members of a professional corporation remain liable for their own personal negligence and malpractice, but will not be liable for the negligence or malpractice of other members.

See also

• Corporation
• Limited Liability

Definition

Dividend payment made to the holders of preferred stock. See: Preferred stock.

Definition

Right of existing shareholders in a corporation to purchase newly issued stock before it is offered to others. The right is meant to protect current shareholders from dilution in value or control. Preemptive rights, if recognized, are usually set forth in the corporate charter. Shareholders will usually be issued a subscription warrant, which indicates how many shares of the newly issued stock they are entitled to buy, typically pro rata percentage of current ownership.

Definition

A corporation’s defensive strategy against a hostile takeover bid in which current shareholders other than the tender-offer bidder or prospective bidder, upon a triggering event, have the right to purchase additional corporate stocks at a deeply discounted price. The effect is to dilute the value of the stock and increase the bidder’s acquisition costs. Also called a shareholder rights plan.