05.01 HO 4, Page 1
05.01 VOCABULARY
alien—a corporation chartered in another nation doing business in the state.
articles of incorporation – application form from the secretary of state’s office filed for
incorporating a business.
articles of partnership – a partnership agreement usually express (may be written or oral)
common stock – basic form of corporate ownership payable to shareholders as dividends at par or
no-par value.
corporation - a legal entity that is treated as an artificial person by the law. with limited liability of
owners..
corporation by estoppel – courts will not allow denial of existence of a corporation when a situation
of some party’s willingness to treat a person as a corporation occurs.
de facto corporation – does not exist in law but exists in fact.
de jure corporation – lawfully exists after all formalities have been completed.
dissolution – change in the relationship of the owners that occurs when one owner stops being
associated with the business.
dividend – profit paid through common stock to the shareholders, based on the corporation’s
performance.
domestic—a corporation chartered in a particular state.
dormant partner—is one who is neither known to the public as a partner or active in management.
employer identification number – assigned by IRS for income tax purposes when employees are
hired.
fictitious name – proprietor uses any name but his/her own name (made-up).
foreign—a corporation that does business in one state but is chartered in another state.
general partnership—one which all the partners assume full personal liability for debts of the firm.
incorporators—signors of the Articles of Incorporation.
joint liability –all the owners of the business must be sued together in the event of a lawsuit.
joint venture—partnership in which one or more persons or firms combine their resources to
complete one complex project.
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05.01 HO 4, Page 2
liquidation—the ending of a corporation.
merger— the process by which one corporation blends into another existing corporation.
nonprofit—a corporation organized for a social, charitable, or educational purpose.
partnership by estoppel – occurs because someone does or says something that leads a third party to
believe that a co-ownership exists.
partnership by proof of existence – the way two people conduct their business together.
partnership (general) – two or more competent parties combine their money, labor and skills for the
purpose of carrying on a lawful business.
perpetual life—one major advantage of corporations, which means the corporation can continue
indefinitely with new owners.
preferred stock—a type of stock that entitles its owner to a stated dividend.
private—a corporation established for business or charitable reasons.
promoter – person who carries out the incorporation process and is personally liable for contracts
entered into before the corporation is formed.
public—a corporation established for governmental purpose.
secret partner—one who is not known to the public as a partner yet participates in management.
share – certain amount of money paid for each single unit of ownership owned.
shareholder—a person who owns one or more shares of stock.
silent partner—one who may be known to the public as a partner but takes no active part in
management.
sole proprietorship – a form of business that is owned and operated by one person
Tenancy in partnership—a co-ownership of partnership property.
termination—ending of a partnership.
Uniform Partnership Act (UPA) – the law that governs most business associations of two or more
persons.
unlimited liability – business owner is responsible for all losses experienced by the business.
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