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Glossary of Terms

Agent for service of process
An agent, required to be appointed by a corporation, whose duties are limited to receiving service of process issued against the corporation. Also known as a Registered Agent , Resident Agent, or Statutory Agent.

Annual Report
A required annual filing in a state, usually listing directors, officers and the past years financial information. Can also refer to an annual report of business activity over the past year to be given by a corporation to its shareholders.

Application for Certificate of Authority
The registration a corporation makes to conduct business in state(s) other than the state it is incorporated in. Also called "Foreign Corporation"

Articles/Certificate of Incorporation/Organization
The articles of incorporation are what make up the Certificate of Incorporation. Article one is normally the name of the company, etc. Also known as the corporate charter. The Articles of Organization make up the Certificate of Organization which is the document filed in many states to register a limited liability company (LLC) with the state.

Assumed Name
An alternate name, other than the legal name, under which a corporation or other business organization conducts business. May also be referred to as a fictitious name, a trade name or dba ("doing business as"). Will be required when a company’s name is not available for use in a jurisdiction/state where an existing company wishes to file an Application for Certificate of Authority

Authorized Shares
The number of shares, in total, that a corporation is able to issue, as indicated in the Certificate of Incorporation.

Board of Directors
The governing body of a corporation who is elected by shareholders. The directors are responsible for making the decisions for the corporation, selecting the officers and handling supervision and general control of the corporation.

The basic rules and regulations for the conduct of the corporation's business and affairs. May be subject to statutory law and the Articles of Incorporation.

Certificate of Good Standing
A certificate issued by the state office a company is incorporated in, which confirms that the company is in good standing with their office and all franchise taxes and fees are paid to date. The date of incorporation and date last franchise taxes were paid may also be shown. Also known as a certificate of existence or Certificate of Authorization.

Certified Copy
A certificate issued by the state office that asserts the attached document is a true and correct copy of the original document filed with the state.

Close Corporation
A more restrictive form of corporation. Close Corporations are normally limited in the number of share holders, and have first right of refusal with regard to the sale of stock. Exact specifications vary by jurisdiction. Not all state statutes provide for a close corporation provision.

Common Shares
A general class of shares most commonly used for small or general corporations.

Corporate Kit
Corporate Kit Binder that contains basic record keeping material for the corporation. Normally includes hand press corporate seal, minutes and bylaws, stock certificates (or membership certificates) and ledger for recording sales of stock/membership certificates.

Corporate Seal
A hand-press-metal-seal which creates a raised imprint on paper. The seal is sometimes required by the bank when opening a corporate account, and is often affixed to the signature of an officer of the corporation, when signing legal documents, contracts, etc.

Corporate Veil
The legal concept wherein the corporate entity exists in part to shield the personal assets of shareholders from personal liability for the debts or actions of that corporate entity as opposed to a general partnership or sole proprietorship in which the owner could be held responsible for the debts of the company.

The individuals who, acting as a group known as the board of directors, manage the business and affairs of a corporation. Directors normally make the decisions for the corporation, and officers carry out the duties of the corporation.

A filing with state, to formally wind up and close your company.

Doing Business As or D/B/A
An alternate name, other than the legal name, under which a corporation or other business organization conducts business. May also be referred to as an assumed name, fictitious name, or trade name. Will be required when a company’s name is not available for use in a jurisdiction/state where an existing company wishes to file an Application for Certificate of Authority.

Fictitious Name
A name other than the true name, under which a corporation or other business organization conducts business. May also be referred to as an assumed name, a trade name or "doing business as" (d/b/a). Will be required when a company’s name is not available for use in a jurisdiction/state where an existing company wishes to file an Application for Certificate of Authority.

Foreign Corporation
A term applied to a corporation doing business in a state other than its state of incorporation. Formal foreign corporation registration is normally required by each state the corporation does business in, outside of the state of incorporation.

Franchise Tax
An annual fee usually levied annually upon a corporation, limited liability company or similar business entity for the right to exist or do business in a particular state. Failure to pay the franchise tax or similar fees by a required deadline may result in the administration dissolution of the company and forfeiture of the charter. This term refers to an annual fee, NOT that the corporation itself is a franchise.

Going Public
The process of selling stock to the public and/or offering stock on the NYSE.

Good Standing
This is a state certified document that asserts the company is currently up to date with all the state requirements.

The filing of documents with the Secretary of State's office to create a new business entity.

The person(s) who prepares the certificate of incorporation for filing with the State office. The duties of the incorporator are normally limited to the filing of the document, and end, as soon as the filing is made. Also known as organizer for some entity types.

Limited Liability Company (LLC)
A type of corporate filing providing similar benefits to an Incorporation. Limited liability companies are generally able to provide the limited personal liability of corporations and the pass-through taxation of partnerships or S corporations.

Limited Partnership
A statutory form of partnership consisting of one or more general partners who manage the business and are liable for its debts, and one or more limited partners who invest in the business and have limited personal liability.

More than 50 percent; commonly used as the percentage of votes required to approve decisions for the corporation.

The board of directors and executive officers of a corporation, limited liability company or similar business entity.

The individuals who are responsible for the maintenance, administration and management of the affairs of a limited liability company (LLC). In most states, the managers serve a particular term and report to and serve at the discretion of the members. Specific duties of the managers may be detailed in the articles of organization or the operating agreement of the LLC. In some states, the members of an LLC may also serve as the managers.

The owner(s) of a limited liability company (LLC). Unless the articles of organization or operating agreement provide otherwise, management of an LLC is vested in the members in proportion to their ownership interest in the company.

Membership Certificates
Similar to stock certificates, they act as evidence of ownership of and membership in a limited liability company or non-stock/non-profit corporation.

The corporate minutes are the written record of transactions taken or authorized by the board of directors or shareholders. These are usually kept in the corporate minute book in diary fashion.

Name Reservation
Most states allow a name to be checked for availability prior to the filing of incorporation or foreign corporation paperwork, and if it is available, reserve it for a certain period of time for a small fee. Name Reservations are normally given for 30-90 days, depending on the state.

No Par Value Shares
Shares which do not have a minimum selling price (or par value) assigned. The shares may be sold for any amount that someone is willing to pay for them.

Not-for-Profit Corporation
A not-for-profit corporation (also known as a non-profit corporation) is generally organized for some socially beneficial purpose, rather than for the direct monetary benefit of the directors or members. Not all not-for-profit corporations are tax exempt and some make a profit.

Individuals appointed by the board of directors who are responsible for carrying out the duties of the corporation.

Operating Agreement
A contract among the members of a limited liability company governing the membership, management operation and distribution of income of the company.

Organizational Meetings
The initial meeting(s) of incorporators or initial directors that are held after the filing of the articles of incorporation to complete the organization of the corporation.

The person(s) who perform the act of preparing and filing the paperwork which forms a limited liability company. The duties of the Organizer normally end, after the paperwork is filed with the state office. Also called incorporator for corporations.

Par Value
The minimum selling price assigned to a share of stock. The share of stock may be sold for MORE than the par value but NOT less than the par value.

Parent Corporation
A corporation or other entity type that owns the majority of the shares or "interest" in another corporation.

Preferred Shares
Ownership interest in a corporation usually carries no voting rights, but may carry a dividend and may have priority over common stock in the payment of dividends and upon liquidation.

The registration of a corporation or LLC in to a State that they are not already incorporated in. Normally when a company is conducting business in a state OTHER than the State(s) they incorporated in, a qualification registration is required. This means that the corporation or LLC will then be "qualified" to conduct business in this particular state, even though they did not incorporate there.

Registered Agent
The Registered Agent is the person named in the Certificate of Incorporation/Formation who is the official contact for the corporation. The Registered Agent is responsible for receiving Service of Process and other official mail on behalf of the corporation/LLC and is the Corporation's point of contact for the Secretary of State's office.

Registered Office
The "official address" of the corporation. In states requiring the appointment of a registered agent, it is usually the address of the Registered Agent. The registered office address is included in the Certificate of Incorporation/Formation and is part of the public record.

S Corporation
An alternative way for a corporation to be taxed. All corporations are initially filed as "C" corporations, and are subject to double taxation (corporate and personal level taxes). Choosing to file for "S" status (filing the 2553 form with the IRS) allows a corporation to avoid the double taxation. "S" corporations are subject to ownership restrictions and some corporations may not be eligible to file for "S status.

Individuals or entities that have paid for or been given shares of a corporation. They are considered the owners of the corporation based on the percentage of shares they own.

Sole Proprietorship
A sole person owning a business that is not incorporated. The owner may be personally liable for business debts and claims against the business.

Stock Certificate
A certificate issued that is used as proof of ownership of shares of stock in a corporation. The stock holders name, and date of purchase are normally shown on the stock certificate. May also be referred to as a share certificate.

Bad standing status proclaimed by the state because a company has not met all the requirements necessary to maintain good standing status.

Voluntary Dissolution
The decision by shareholders, incorporators or initial directors to formally dissolve a corporation with the Secretary of State's office.