Business, Chap 6
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When one company completely buys out another company.
Board of Directors
- Separation of ownership and management.
- Sets policy
- Makes major business and financing decisions
- Authorizes stock issuance
- Elects management team
Sarbanes-Oxley Act of 2002
- Federal Law
- states; Board of Directors cannot ignore their responsibilities of managing the internal controls of a company without incurring risk of long prison sentences and huge fines.
CEO (chief executive officer)
- Reports to Board of Directors
- Responsible for entire operations of a corporation
CFO (chief financial officer)
- Reports to CEO
- Responsible for ; Analyzing/Reviewing financial data
- Reporting financial performance
- Preparing budgets
- Monitoring expenditures and costs.
COO (chief operating officer)
- Reports to CEO
- Responsible for day-to-day operations
- Business structured as a 'separate legal entity'
- Files separate tax returns
- Formed under state laws
- Protects the owners personal assests
- Can sue and be sued
- Requires much ongoing paperwork
as a separate legal entity, it is taxed at the entity level
- Taxed at the shareholder level
- Profit/Loss based on proportional interest of ea shareholder
- Shareholders must be U.S residents
- Can have no more than 100 Shareholders
- Can only have one class of stock
- Board of directors
- Corporate Officers
The 7 Steps of Forming a Corporation
- 1. Chose a Name
- 2. Appoint Directors
- 3. File Articles of Incorporation
- 4. Draft Bylaws
- 5. Hold a Meeting of the Board
- 6. Issue Stock
- 7. Obtain Licenses and Permits
- Limited Liability
- Unlimited members
- Must dissolve when any member leaves, imposed by
- state of formation.
- Distribution of profits determined by owner
Effect achieved when two companies combine.
Created when the new company, as a result of a merger or aquisition, can realize operation or financial economies of scale.
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