LEGL 2700 Roessing Final Exam Study
Guide.
Members - answerThe individuals or business entities that belong to a limited liability company
Benefit Corporation - answera corporate form that requires directors to ensure that the corporation
meets explicit social goals in addition to producing sha...
Members - answer✔The individuals or business entities that belong to a limited liability company
Benefit Corporation - answer✔a corporate form that requires directors to ensure that the corporation
meets explicit social goals in addition to producing shareholder profits
Managers - answer✔A person designated and charged with day-to-day operations of a limited liability
company
Organizer - answer✔The parties responsible for bringing a limited liability company into existence.
These parties correspond to the functions of incorporators with respect to corporations
Security - answer✔An investment in which the investor does not participate in management
Securities and exchange commission - answer✔The federal administrative agency that regulates the
securities industry
Securities act of 1933 - answer✔The federal law that regulates the initial sale of securities to the public
Issuer - answer✔The term in securities law for an individual or business organization offering a security
for sale to the public
Underwriter - answer✔The party that, in securities law, guarantees the issuer that the securities offered
for sale will be sold
Controlling person - answer✔The person who has the control of, or is controlled by, the issuer of
securities in securities laws
Seller - answer✔In commercial law, a person who sells of contracts to sell goods
Closely held - answer✔An organization that is owned by only a few people
Publicly held - answer✔A business organization that has hundreds, if not thousands, of owners who can
exchange their ownership interests on public exchanges
Dissolution - answer✔The cancellation of an agreement, thereby rescinding its binding force.
Sole proprietorship - answer✔The simplest form of business organization, created and controlled by one
owner
Partnership - answer✔A business organization involving two or more persons agreeing to conduct a
commercial venture while sharing its profits and losses
Articles of partnership - answer✔Another name for a formally drafted partnership agreement
Assumed-name statute - answer✔A state law that requires partners to make a public filing of their
identities if their partnership operates under a name that does not reveal the partners' identities
Buy and sell agreement - answer✔A contract, usually among partners, but perhaps among shareholders,
wherein one party agrees to but the ownership interest held by another party or the first party agrees to
sell such an interest to the other party. These contractual provisions help provide for a transition of
owners without harming the business of the organization
Jointly and severally liable - answer✔The legal principle that makes two or more people, usually
partners, liable for an entire debt as individuals or in any proportional combination
Corporation - answer✔An artificial, but legal, person created by state law
Domestic Corporation - answer✔A business organization created by the issuance of a state charter that
operates in the state that issued the charter
Foreign Corporation - answer✔A business organization, created by the issuance o a state charter, that
operates in states other than the one issuing the charter
Alien Corporation - answer✔A corporation created under the authority of a foreign country
Charter - answer✔The legal document issued by a state when creating a new corporation
Incorporators - answer✔Those individuals who are responsible for bringing a corporation into being
Articles of incorporation - answer✔The legal document that forms the application for a state charter of
incorporation
Shareholders - answer✔The owners of corporations
Directors - answer✔Those individuals who are elected by the shareholders to decide the goals and
objectives for the corporate organization
Officers - answer✔Those individuals appointed by directors of a corporation to conduct that daily
operations of the corporate organization
Proxy - answer✔The legal document whereby a shareholder appoints an agent to vote the stock at a
corporation's shareholders' meeting
Derivative suit - answer✔A lawsuit filed by one or more shareholders of a corporation against that
organization's management. This suit is brought to benefit the corporation directly and its shareholders
indirectly
Limited personal liability - answer✔This term is used to describe the exposure of business owners to pay
the debts of their businesses when such exposure does not exceed the owner's investment in the
business
Piercing the corporate veil - answer✔The legal doctrine used by courts to disregard the existence of a
corporation, thereby holding the shareholders personally liable for the organization's debts
Alter-ego theory - answer✔One method used by courts to pierce the corporate veil when a shareholder
fails to treat the corporate organization as a separate legal entity
Double tax - answer✔A disadvantage of a corporate firm of organization in that the corporation must
pay a tax on the money earned and the shareholder pays a second tax on the dividends distributed
Limited partners - answer✔Those owners of a limited partnership who forgo control of the
organization's operation in return for their liability being limited to the amount of their investment
General partners - answer✔The owner of a limited partnership that enjoys the control of the
partnership's operation. This type of partner is personally liable for the debts of the limited partnership.
S corporations - answer✔A business organization that is formed as a corporation but, by a shareholders'
election, is treated as a partnership for taxation purposes
Limited liability company - answer✔A type of business organization that has characteristics of both a
partnership and a corporation
Limited liability partnership - answer✔A hybrid business partnership
Articles of orgnizations - answer✔The document used to create a limited liability company.
Organizers - answer✔The parties responsible for bringing a limited liability company into existence
Registration statement - answer✔The legal document required to be filed with the Securities and
Exchange Commission prior to securities being offered for sale to the public
Prefilling period - answer✔As it relates to an initial public offering of securities, this is that period of
time prior to the filing of a registration statement with the SEC
Waiting period - answer✔As it relate to an initial public offering of securities, this is the period of time
that follows the filing of documents with the SEC and that precedes when the securities can be sold
Tombstone ads - answer✔An advertisement announcing the public offering of securities
Posteffective period - answer✔As it relates to an initial public offering of securities, this is the period
during which the securities may be sold
Prospectus - answer✔The legal document required by the 1933 Securities Act to be made available to
potential purchasers of securities
Due diligence defense - answer✔A defense that experts may assert in a 1933 Securities Act case
involving the failure to register securities or the failure to provide accurate documents
Securities exchange act of 1934 - answer✔The federal law that regulates sales of securities
Short-swing profits - answer✔The proceeds gained by an insider buying and selling, or vice versa,
securities within a six-month time period
Tippee - answer✔A person who learns of nonpublic information about a security from an insider
Misappropriation theory - answer✔The legal doctrine supported by the Securities and Exchange
Commission and the courts that any person who shares nonpublic information with another party or
who trades on the information violates the securities laws if that information was intended to be kept
confidential
Private Securities Litigation Reform Act - answer✔A 1995 federal statute that limits the recovery for
securities violations against third parties who are not directly responsible for the violation
Blue sky laws - answer✔Securities law enacted by States to protect the potential investor from buying
worthless or risky securities without financial and other information about what was being purchased
Sarbanes-Oxley Act of 2002 - answer✔The law enacted to correct inadequacies in the law that existed
and allowed numerous examples of corporate fraud
JOBS Act - answer✔Eases federal regulations of initial public offerings to promote investment in startup
companies
Insider - answer✔A person who owns 10% or more of a company or who is a director or officer of the
company
Scienter - answer✔With knowledge
Bona fide occupational qualifications - answer✔A qualification that permits discriminatory practices in
employment if a person's religion, sex, or national origin is reasonably related to the normal operation
of a particular business
Disparate treatment - answer✔A term of employment litigation that refers to the illegal discriminatory
treatment of an individual in some protected class
Disparate impact - answer✔A term of employment litigation that refers to the disproportionate impact
of a policy neutral on its face on some protected class
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