CLA Business Organizations, Part 7
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25 terms
Terms | Definitions |
|---|---|
 characteristics of closely held corporations | 1. few stockholders; play significant roles in all levels of management; 2. no public market for stock; transfer restrictions 3. management conducted on informal basis 4, caution not to to disregard corporate formalities and thus allow outsiders to pierce corporate veil |
| "freeze out" minority shareholders | majority shareholders can out-vote the minority shareholders on a consistent basis and effectively exclude them from management functions |
| methods to protect minority shareholders | 1.provide greater than majority voting requirements, usually unanimous 2. create separate classes of stock for majority and minority shareholders 3. mandatory agreement requiring majority shareholders or corporation to buy out minority at a price fixed by a predetermined formula 4. in case of deadlock, submit disputes to arbitrator 5. involuntary dissolution |
| blue sky laws | State laws that regulate the offering and sale of securities for the protection of the public. |
| Securities and Exchange Commission | federal agency that has responsibility for regulating the various stock exchanges; strives for full disclosure of accurate information to investors and prohibits insider trading |
| Sherman Antitrust Act | law that made it illegal to create monopolies or trusts that restrained free trade |
| Clayton Act | Corrected the problems of the Sherman Antitrust Act; outlawed certain practices that restricted competition; unions on strike could no longer be considered violating the antitrust acts. |
| Federal Trade Commission | Established to preserve competition by preventing unfair business practices and investigates complaints against companies for price fixing, restraint of free competition, unfair trade practices |
| anti-trust laws | Laws that aim to prevent monopolies and ensure fair competition between businesses; prohibits directors sitting on boards of competition corporations, prevent tying one product to another in such a way as to require purchasers to pay higher price than they would otherwise pay. |
| Environmental Protection Agency (EPA) | independent federal agency established to coordinate programs aimed at reducing pollution and protecting the environment by way of land pollution, water pollution and air pollution |
| Equal Opportunity Commission (EEOC) | Federal Agency created to enforce the Civil Rights Act of 1964, which forbids discrimination in hiring, promotion and firing of employees on the basis of race, creed, national origin, religion, or sex; applies to companies with 15+ full-time employees |
| Occupational Safety and Health Administration (OSHA) | Establishes and enforces standards that protect workers from job related injuries and illnesses |
| National Labor Relations Board | An agency of the federal government that has oversight responsibility for enforcing laws pertaining to union/management relations |
| Wagner Act | Law passed in 1935 that aided unions by legalizing collective bargaining and closed shops, and by establishing the National Labor Relations Board |
| Racketeer Influenced Corrupt Organizations Act | a federal act that provides for both criminal and civil penalties for racketeering |
| in rem jurisdiction | proceedings against a thing (a bank account or real estate) distinguished from those against a person |
| quasi in rem jurisdiction | jurisdiction over a corporate property located within the court's boundaries |
| derivative actions | action filed in federal court brought when a corporation is injured by the negligence or wrongdoing of its officers or directors |
| strike suits | suits filed merely to secure a favorable private settlement rather than to redress a corporate wrong |
| Actions that must be taken prior to filing derivative action | After 90 days, 1. shareholder must have been shareholder at time the alleged wrong took place or have become a shareholder by operation of law (inheritance); 2.shareholder must make demand upon board of directors to enforce demand; or 2. prove such demand would be futile |
| indemnification | allowed if defendant (officer or director) acted in good faith and in a manner reasonably believed to be in the best interests of the corporation in carrying out his or her duties |
| voluntary dissolution | Dissolution of a corporation that has begun business or issued shares upon recommendation of the board of directors and a majority vote of the shares entitle to vote; requires a filing with secretary of state; upon dissolution, all assets liquidated, creditors paid, and remaining proceeds distributed to shareholders according to ownership preferences and interests |
| involuntary dissolution | Dissolution by judicial proceedings and decree; that is not approved by the board of directors or shareholders of a corporation, often initiated by creditors of an insolvent corporation |
| reasons for involuntary dissolution | 1. failed to file annual report or pay franchise tax board; 2. procured its articles of incorporation through fraud; 3. exceeded or abused its legal authority; or 4. failed to maintain or appoint a registered agent or failed to notify state of change of registered agent. |
| court ordered liquidation | 1. directors are deadlocked over management and irreparable injury to corporation is imminent; 2. the acts of directors are illegal, oppressive, or fraudulent 3. corporate assets are misapplied or wasted; or 4. shareholders are deadlocked in voting power and have failed in 2 successive annual meetings to elect successor directors for terms that have been elected |
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