Business Law GLOSSARY

Glossary of Business Law Terms

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Acquisition: The purchase of one corporation by another, through either the purchase of its shares, or the purchase of its assets.

Administrative Dissolution: The involuntary dissolution of a corporation by the Secretary of State, or other equivalent department, due to the failure of a corporation to meet statutory requirements such as periodic filing and tax reporting requirements.

Advisory Board: A body that advises the board of directors and management of a corporation but does not have authority to vote on corporate matters.

Affidavit: A written statement under oath.

Age Discrimination in Employment Act: A federal law that protects older employees from employment discrimination on the basis of age.

Agent for Service of Process: The person or entity that is authorized to receive legal papers on behalf of a corporation.

Agreement: Mutual assent between two or more parties; normally leads to a contract; may be verbal or written.

Alter Ego Liability: Doctrine that attaches liability to corporate shareholders in cases of commingling of assets and failure to observe corporate formalities.

Alter Ego: Corporation used by an individual to conduct personal business. It's illegal. In alter ego scenario, individuals will be held liable to the corporation. See also piercing the corporate veil.

Amendment of Articles of Incorporation: The procedure by which one or more changes is made to a corporation's articles of incorporation.

Americans with Disabilities Act: A federal law that protects employees from discrimination on the basis of disability, and imposes upon employers the requirement that they make "reasonable accommodations" for their employees' disabilities.

Annual Meeting of Directors: A meeting held each year to elect officers of a corporation, and to address other corporate matters. Usually follows immediately after an Annual Meeting of Shareholders.

Annual Meeting of Shareholders: A meeting held each year to elect directors of a corporation, and to address other corporate matters.

Annual Meeting: Yearly meeting of shareholders in corporate law context for the purpose of electing shareholders.

Answer: Pleading filed by the defendant that responds to a complaint, petition, or motion.

Appeal: A request to the higher court for review of the lower court's decision and to request a reversal of the judgment.

Apportionment: The allocation of income earned from activities in a particular state or assets present in a particular state to determine the tax due in that state.

Arbitration: The procedure by which a dispute may be resolved by a person who is not a judge. Arbitration is often used to limit legal costs to both parties.

Arbritrator: A person who conducts an arbitration.

Articles of Incorporation: The document which gives birth to a corporation by filing in the state of incorporation. Articles cover foundational matters such as the name of the corporation, the shares it is authorized to issue, its corporate purpose, and its agent for service of process.

Assumption of Risk: A doctrine that states if the plaintiff has knowingly accepted the danger of doing something, recovery from the defendant in an action brought for negligence will be barred.

At Will Employment: A type of employment relationship in which there is no contractual agreement and either party may end the employment relationship at any time, for any reason or for no reason at all, without incurring a penalty.

Audit: An examination by a trained accountant of the financial records of a business or governmental entity, including noting improper or careless practices, recommendations for improvements, and a balancing of the books.

Auditor: An accountant who conducts an audit to verify the accuracy of the financial records and accounting practices of a business or government. A proper audit will point out deficiencies in accounting and other financial operations.

Authorized Capital: The total number of a corporation's authorized shares multiplied by the share's par value. For example, 1,000,000 authorized shares of stock with a one cent par value equals an authorized capital of $10,000.

Authorized Shares: The number of shares of a corporation's stock that the corporation has the authority to issue. The authorized shares of a class of stocks is stated in a corporation's articles of incorporation.