Corporate Formalities Definitions

Below you will find a list of the definitions related to terms that you will find within your corporate formality documents.

Alter ego doctrine -
This principle allows the courts to refuse a corporation’s right to shield its owners from the liabilities associated with the corporation. It stipulates that a corporation formed merely for personal advancement rather than sound and legitimate business purposes—cannot be considered a corporation.
Annual meeting of directors -
This is a yearly meeting of the directors of a corporation to show ongoing management of the corporation. These meetings are mandatory and help to prove the corporation is currently viable.
Annual meeting of stockholders -
This is a yearly meeting of the stockholders of a corporation to show ongoing management of the corporation. These meetings are mandatory and further help to prove the corporation’s viability.
Articles of incorporation -
These articles represent the contracts that hold the corporation together and set the guidelines for the business purpose and how the corporation will be structured.
Bearer shares -
Stock of a corporation that is owned by the holder of those shares. These are hard to track and make it hard to call meetings or take a vote in a corporation.
Bylaws -
These are rules adopted by an organization chiefly for the governing of its members and the regulation of its affairs.
Corporation -
A body formed and authorized by law to act as a single person although constituted by one or more persons and legally endowed with various rights and duties including the capacity of succession.
Deed of trust -
A document that evidences a lien on real property, not unlike a mortgage.
Director -
An individual selected to sit on a board that transforms the goals of the stockholders into action plans.
Employee -
An individual hired by a business to fulfill the common duties of the business through an employee contract.
Fiscal Year -
An accounting period of 12 months.
Foreign corporations -
A corporation that is formed in another state or jurisdiction that qualifies to do business in your state.
Formalities -
The procedures that must be followed to allow a corporation to run as a separate entity.
Fraudulent Conveyance -
A transfer of property intended to place assets out of reach of rightful creditors.
Freestanding Resolution -
A motion passed on the spot by the Board of Directors to resolve an issue. The ability to make freestanding resolutions is given to one director, or when there is only one director to make the resolution. This is a more expedient and less formal way of making major decisions in a corporation. These freestanding resolutions still need to be entered into the corporate minutes as past business of a corporation for the next meeting of directors.
Limited Partner -
A partner in a venture who has no management authority and whose liability is restricted to the amount of his or her investment.
List of Officers and Directors -
A list filed annually with the Secretary of State that gives the names and addresses of the directors and certain officers of a corporation.
Partnership -
A legal relation existing between two or more persons contractually associated as joint principals in a business. The persons joined together in a partnership, a relationship resembling a legal partnership and usually involving close cooperation between parties having specified and joint rights and responsibilities.
Preferred State -
A state in which the laws and regulations that govern business are established to encourage economic growth in favor of business.
Registered agent -
One who is readily available for service of legal process; duties vary from state to state. Most Corporations and LLCs are required to have a registered agent.
Registered Shares -
Shares that have been issued and the current owners names and addresses are recorded.
Resolution -
A written consent to action by the Board of Directors.
Shareholder -
An owner of stock in a corporation.
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DISCLAIMER: Compass Group and its employees or agents are not in the business of providing tax or legal advice. If legal advice or other expert assistance is required, the services of a person in those professions should be sought. Compass Group, its employees and agents do not make any factual determination as to the validity of any business deduction for tax purposes. Compass Group does not expressly or impliedly endorse, accept, or validate any business record produced by Compass Group on behalf of Client. The Completed Documents produced by Compass Group through this written request are based solely upon the information provided by the client.