Below you will find definitions for terms related to incorporation of your
Florida business. It's a good idea to read through this list and familiarize
yourself with important business incorporation terms you might hear in the
future after incorporating your new Florida business. ACQUISITION
Obtaining control of another corporation by purchasing all or a majority of
its outstanding shares, or by purchasing its assets.
ADMINISTRATIVE DISSOLUTION
An involuntary dissolution of a corporation by an act of the Secretary of State
or similar state authority, caused by the corporation's failure to comply
with certain statutory requirements; especially the failure to file an annual
report, to pay franchise taxes or maintain a valid Registered Agent.
ADVISORY BOARD OF DIRECTORS
An advisory board of directors are individuals appointed to advise an elected
board of directors. This board is not bound by the duties imposed upon elected
board members, and the corporation is not required to follow their recommendations.
AGENT
Anyone who is authorized to act on the behalf of another. A corporation acts
only through its agents; therefore, it is important to define what actions
an agent is authorized to perform.
AGENT FOR SERVICE OF PROCESS
Agent for service of process: An agent, required to be appointed by a corporation,
whose authority is limited to receiving process issued against the corporation.
Also known as a Registered Agent or a Resident Agent.
AMENDMENT
An addition to, deletion from, or a change of existing provisions of the articles
of incorporation of a domestic corporation.
ANNUAL MEETING
A yearly meeting of shareholders at which directors are elected and other general
business of the corporation is conducted.
ANNUAL REPORT
A required annual filing in a state, usually listing directors, officers and
financial information. Also, an annual statement of business and affairs
furnished by a corporation to its shareholders.
ARTICLES OF INCORPORATION
The title of the document filed in many states to create a corporation. Also
known as the certificate of incorporation or corporate charter.
ARTICLES OF ORGANIZATION
The title of the document filed in many states to register a limited liability
company (LLC) with the state. Also known as articles of formation.
ASSUMED NAME
A name other than the true name, under which a corporation or other business
organization conducts business. Also referred to as a fictitious name, a
trade name or "doing business as" (d/b/a).
AUTHORIZED SHARES
The maximum number of shares that a corporation may issue pursuant to its articles
of incorporation.
BOARD OF DIRECTORS
The governing body of a corporation who is elected by shareholders. The directors
are responsible for selecting the officers and the supervision and general
control of the corporation.
BUSINESS CORPORATION
A business corporation act is the collection of laws in each state that governs
corporations.
BYLAWS
The regulations of a corporation that, subject to statutory law and the articles
of incorporation, provide the basic rules for the conduct of the corporation's
business and affairs.
CERTIFICATE OF GOOD STANDING
A certificate issued by a state official as conclusive evidence that a corporation
is in existence or authorized to transact business in the state. The certificate
generally sets forth the corporation's name; that it is duly incorporated
or authorized to transact business; that all fees, taxes and penalties owed
the state have been paid; that its most recent annual report has been filed;
and, that articles of dissolution have not been filed. Also known as a certificate
of existence or certificate of authorization.
CERTIFICATE OF INCORPORATION
The title of the document filed in many states to create a corporation. Also
known as the articles of incorporation or corporate charter.
CLOSE CORPORATION
A corporation that elects in its articles of incorporation to be registered
under the close corporation statutes of their state of incorporation. Some
state close corporation statutes provide for a maximum number of shareholders.
In addition, close corporation statutes may eliminate or limit the powers
of the board of directors, prescribe preemptive rights to the shareholders
or relax the corporate formalities. Exact specifications vary by jurisdiction.
Not all state statutes provide for a close corporation provision.
COMMON SHARES
A class of shares that has no special features and possesses no greater rights
than any other shares.
CONSOLIDATION
The statutory combination of two or more corporations to create a new corporation.
CONSTITUENT
A party to a transaction; a corporation involved in a merger, consolidation
or share exchange.
CORPORATE INDICATOR
A word or an abbreviation of a word that must be included in a corporation's
name to indicate that the named entity is a corporation. Valid corporate
indicators include: incorporated, corporation, limited, company, inc., corp.,
ltd. and co. The list of acceptable corporate indicators will vary depending
upon the jurisdiction in which the corporation is registered.
CORPORATE KIT
A binder usually containing essential items for the routine maintenance and
administration of a corporation or limited liability company. Corporate kits
provided by The Company Corporation, Inc. include sample minutes and bylaws,
stock certificates, a corporate seal and stock ledger.
CORPORATE SEAL
A corporate seal is a device made to either emboss or imprint certain company
information onto documents. This information usually includes the company's
name and date and state of formation. Corporate seals are often required
when opening corporate or LLC bank accounts, distributing stock or membership
certificates or conducting other corporate business. The Company Corporation
includes custom-made corporate seals as part of the Corporate Organizer.
CORPORATION
An artificial entity created under and governed by the laws of the state of
incorporation.
CORPORATE LAW
The statutory provisions of a state relating to domestic and foreign corporations.
DEBENTURE
A long-term debt issued mainly to evidence an unsecured corporate debt.
DERIVATIVE
A lawsuit brought by a shareholder on behalf of a corporation to protect the
corporation from wrongs committed against it.
DIRECTORS
The individuals who, acting as a group known as the board of directors, manage
the business and affairs of a corporation.
DISSENTERS
A right granted to shareholders that entitles them to have their shares appraised
and purchased by the corporation if the corporation enters into certain transactions
that the shareholders do not approve of.
DISSOLUTION
The statutory procedure that terminates the existence of a domestic corporation.
DISTRIBUTION
A transfer of money or other property made by a corporation to a shareholder
in respect of the corporation's shares.
DIVIDEND
A distribution of a corporation's earnings to its shareholders.
EQUITY FINANCING
A method of raising capital in which a corporation sells shares of stock.
EQUITY INTEREST
An ownership interest; the interest of a shareholder as distinguished from
that of a creditor.
FICTITIOUS NAME
A name other than the true name, under which a corporation or other business
organization conducts business. Also referred to as an assumed name, a trade
name or "doing business as" (d/b/a).
FRACTIONAL SHARE
Ownership in a corporation in an amount less than a full share.
FRANCHISE TAX
A tax or 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 may
result in the administration dissolution of the company and forfeiture of
the charter.
GOING PUBLIC
The process by which a corporation first sells its shares to the public.
HOSTILE TAKEOVER
A takeover that occurs without the approval of the target corporation's board
of directors.
INCORPORATION
The act of creating or organizing a corporation under the laws of a specific
jurisdiction.
INCORPORATOR
The person(s) who perform the act of incorporation and who sign the articles
of incorporation and deliver them for filing.
INDEMNIFICATION
Financial protection provided by a corporation to its directors, officers,
and employees against expenses and liabilities incurred by them in lawsuits
alleging that they breached some duty in their service to or on behalf of
the corporation.
INVOLUNTARY DISSOLUTION
The termination of a corporation's legal existence pursuant to an administrative
or judicial proceeding; dissolution forced upon a corporation rather than
decided upon by the corporation.
JUDICIAL DISSOLUTION
Involuntary dissolution of a corporation by a court at the request of the state
attorney general, a shareholder or a creditor.
LIMITED LIABILITY COMPANY (LLC)
An artificial entity created under and governed by the laws of the jurisdiction
in which it was formed. 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.
LIMITED PERSONAL LIABILITY
The protection generally afforded a corporate shareholder, limited partner
or a member of a limited liability company from the debts of and claims against
the company.
MAJORITY
More than 50 percent; commonly used as the percentage of votes required to
approve certain corporate actions.
MANAGERS
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.
MEMBERS
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
Evidence of ownership of and membership in a limited liability company.
MERGER
The statutory combination of two or more corporations in which one of the corporations
survives and the other corporations cease to exist.
MINUTES
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 REGISTRATION
The filing of a document in a foreign state to protect the corporate name,
often in anticipation of qualification in the state.
NAME RESERVATION
A procedure that allows a corporation to obtain exclusive use of a corporate
name for a specified period of time
NO PAR VALUE SHARES
Shares for which the articles of incorporation do not fix a par value and that
may be issued for any consideration determined by the board of directors.
NOT-FOR-PROFIT CORPORATION
A not-for-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. However, the profit is not distributed to the members or directors.
Also known as a non-profit corporation.
OFFICERS
Individuals appointed by the board of directors who are responsible for carrying
out the board's policies and for making day-to-day decisions.
ORGANIZATIONAL MEETINGS
Meetings of incorporators or initial directors that are held after the filing
of the articles of incorporation to complete the organization of the corporation.
ORGANIZER
The person(s) who perform the act of forming a limited liability company.
PARENT CORPORATION
A corporation that owns a controlling interest in another corporation.
PARTNERSHIP
A business organization in which two or more persons agree to do business together.
PAR VALUE
A minimum price of a share below which the share cannot be issued, as designated
in the articles of incorporation.
PERPETUAL EXISTENCE
Unlimited term of existence; characteristics of most business corporations.
PREFERRED SHARES
A class of shares that entitles the holders to preferences over the holders
of common shares, usually with regard to dividends and distributions of assets
upon dissolution or liquidation.
PROFESSIONAL CORPORATION
A corporation whose purposes are limited to professional services, such as
those performed by doctors, dentists and attorneys. A professional corporation
is formed under special state laws that stipulate exactly which professionals
are required to incorporate under this status.
QUALIFICATION
The filing of required documents by a foreign corporation to secure a certificate
of authority to conduct its business in a state other than the one in which
it was incorporated. Limited liability companies or similar business entities
may also conduct this process.
QUORUM
The percentage or proportion of voting shares required to be represented in
person or by proxy to constitute a valid shareholders meeting, or the number
of directors required to be present for a valid meeting of the board.
RECORD DATE
The date for determining the shareholders entitled to vote at a meeting, receive
dividends, or participate in any corporate action.
REDEEMABLE SHARES
Shares subject to purchase by the corporation on terms set forth in the articles
of incorporation.
REGISTERED AGENT
A person or entity designated to receive important tax and legal documents
on behalf of the corporation. The Registered Agent must be located and available
at a legal address within the specified jurisdiction at all times. Failure
to maintain a Registered Agent in the jurisdiction in which the corporation
is registered, may result in the forfeiture of the corporate status. Also
known as a Resident Agent.
REGISTERED OFFICE
The statutory address of a corporation. In states requiring the appointment
of a Registered Agent, it is usually the address of the Registered Agent.
REINSTATEMENT
Returning a corporation that has been administratively dissolved or had its
certificate of authority revoked, to good standing on a state's records.
RESOLUTION
A formal statement of any item of business that has been voted upon.
RESTATED ARTICLES OF INCORPORATION
A document that combines all currently operative provisions of a corporation's
articles of incorporation and amendments thereto.
S CORPORATION
A corporation granted a special tax status as specified under the Internal
Revenue Code. The code is very explicit on how and when this election is
made and the number of shareholders this type of corporation can have. Since
this type of corporation pays no income tax, all gains and losses of the
corporation pass through to the individual shareholders in proportion to
their holdings.
SHARE
The unit into which the ownership interest in a corporation is divided.
SHARE EXCHANGE
A statutory form of business combination in which some or all of the shares
of one corporation are exchanged for some or all of the shares of another
corporation and neither corporation ceases to exist.
SHAREHOLDERS
Shareholders are the owners of a corporation based on their holdings. They
own an interest in the corporation rather than specific corporate property.
Also known as stockholders.
SOLE PROPRIETORSHIP
An unincorporated business with a sole owner in which the owner may be personally
liable for business debts and claims against the business.
SPECIAL MEETING
A shareholder meeting called so that the shareholders may act on the specific
matters stated in the notice of the meeting.
STOCK
Stock represents ownership in a corporation. It may be represented by a certificate
and can be common or preferred, voting or non-voting, redeemable, convertible,
etc.. The classifications and special designations, if any, of the stock
are set forth in the articles of incorporation.
STOCK CERTIFICATE
Evidence of ownership of shares in a corporation. May also be referred to as
a share certificate.
STOCKHOLDERS
Stockholders are the owners of a corporation based on their holdings. They
own an interest in the corporation rather than specific corporate property.
Also known as shareholders.
SUBSIDIARY
A corporation that is either wholly owned or controlled through ownership of
a majority of its voting shares, by another corporation or business entity.
TAKEOVER
A merger, acquisition or other change in the controlling interest of a corporation.
TARGET
A corporation that is the focus of a takeover attempt.
TAX-EXEMPT ORGANIZATION
Any organization that is determined by the Internal Revenue Service to be exempt
from federal taxation of income. A tax-exempt may be required to operate
exclusively for charitable, religious, literary, educational or similar types
of purposes.
TRADEMARK
A word or mark that distinctly indicates the ownership of a product or service,
and that is legally reserved for the exclusive use of that owner.
UNDERWRITER
A company that purchases shares of a corporation and arranges for their sale
to the general public.
VOLUNTARY DISSOLUTION
Action by shareholders, incorporators or initial
directors to dissolve a corporation.
Better
Business Bureau Approved.
