Glossary of most frequent business formation terms

A B C D E F G H I J L M N O P Q R S T U V W

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Debenture

Debt financing

De Facto Corporation

De Jure Corporation

Derivative suit

Directors

Dissolution

Distribution

Dividend

Doing Business As (DBA)

Domestic Corporation

Double Taxation

 

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Debenture

Debt instrument evidencing the borrower's right to receive interest and principal installments from the named obligor. Unsecured debt is backed only by the integrity of the borrower, not by collateral (security). Applies to all forms of unsecured, long-term debt and evidenced by an agreement called an indenture.

Debt financing

The provision of bonds, bills or notes to business concerns in exchange for debt securities or a note.

 

De Facto Corporation

A corporation treated as standard or official, even if not explicitly stated. At common law it is a partially formed corporation that provides a shield against personal liability of shareholders for corporate obligations.

 

De Jure Corporation

A corporation that has earned its state charter by fulfilling the requirements for formation and is legally entitled to do business in the state.

 

Derivative suit

A lawsuit brought by a shareholder on behalf of a corporation to protect the corporation from injustice committed against it.

 

Directors

The directors of a corporation are its governing board, individuals elected by shareholders. They have the authority to run the company on behalf of the shareholders and are responsible to the shareholders for the results of their decisions. Directors vote on major corporate matters such as the issuing of shares of stock, election of officers, payment of dividends and approval of mergers and acquisitions.

 

Dissolution

The termination of a corporation's legal existence. Dissolution may be involuntary – caused by failure to file annual reports, failure to pay certain taxes, bankruptcy; or voluntary dissolution based on the vote of the shareholders and directors of the corporation.

 

Distribution

A transfer of money or other property made by a corporation to its shareholder(s) in respect to the corporation's shares.

Or the sale of a large amount of stock by a single entity over a period of time rather than all at once, to avoid adversely affecting its market price. Opposite to accumulation.

 

Dividend

A distribution of the earnings of a corporation declared by a company's board of directors and given to its shareholders out of the company's current or retained earnings. Usually quarterly. Usually given as cash (cash dividend), but it can also take the form of stock (stock dividend) or other property. Also called payout.

 

Doing Business As (DBA)

A formal notice that a company is conducting business under a different name. Often used in contracts. Also see Assumed name.

 

Domestic Corporation

In general, a corporation whose articles of incorporation are filed in the state in which it operates and maintains its principal office, as opposed to a foreign corporation.

 

Double Taxation

Government taxation of the same earnings twice; specifically, taxation of earnings at the corporate level and dividends at the stockholder level if the previously taxed income is distributed to the shareholders as dividends. S corporations and Limited Liability Companies are not subject to double taxation.