A B C D E F-H I J-L M N-O P Q-R S T U-Z

Absolute majority A majority of all the voting power, regardless of whether that power is present at the meeting; thus, absent votes are no votes. Chapter 15.

Accounting statements Independent accountants review the accounting records of their clients and prepare standardized reports, accounting statements, based on that review. Chapter 3.

Accredited investors A term of art that refers to rich people who invest in corporations. Chapter 6.

Actual authority A principal is bound to third parties by anything the agent does that is in accordance with the principal's "manifestation" to the agent. Chapter 4.

Adjustment and anchoring In many situations, people make estimates by starting from an initial value that is adjusted to yield the final answer. Adjustments are typically insufficient. That is, different starting points yield different estimates, which are biased toward the initial values. We call this phenomenon anchoring. Chapter 3.

Advance notice bylaw A clause that requires a shareholder to give the board notice of his or her intention to move a proposal or nominate directors at a meeting. Chapter 15 and Chapter 17.

Adverse selection Principals choosing suboptimal agents, or agents choosing suboptimal principals. Chapter 4.

Affiliated corporations Corporations under common control, whether parent-subsidiary or sibling corporations. Chapter 8.

Affirmative covenants Things that a borrowing corporation agrees to do or refrain from doing in order to make a loan less risky, such as maintaining certain financial ratios or agreeing to make all payments of other loans in a timely fashion. Chapter 6.

Agency costs The total of the expenditures made in ameliorating the moral hazard plus the residual loss resulting from moral hazard and risk differences between agent and principal. Chapter 4.

Agent In economics, one who uses some degree of judgment in performing a service for a principal's benefit. In law, one who agrees to act on behalf of another and subject to the other's control. Chapter 4.

All purpose clause A clause in the articles of incorporation that grants the corporation the power to pursue any lawful business. Chapter 10.

Allocation Assigning a partnership's or LLC's profits and losses among its Members. Chapter 18 and Chapter 19.

Amotion The power of the shareholders to remove directors during their term. Chapter 9 and Chapter 15.

Angels Rich individuals who provide venture capital. Chapter 6.

Annual meeting Shareholder meeting that occurs once a year during which shareholders elect directors and engage in other valid shareholder action. Chapter 15.

Antidilution provision A provision that prevents a shareholder's ownership interest from being reduced by change in capital structure. Chapter 7.

Apparent authority An agent's power to bind the principal stemming from a third party's belief, traceable to the principal's manifestation, that the agent is authorized to act for the principal. Chapter 4.

Appraisal right A right, available in certain fundamental corporate changes, to require the corporation to purchase a dissenting shareholder's shares for fair value. Chapter 17.

Asset lock-up These clauses give the acquirer the option to purchase certain key target assets if the transaction does not close. Chapter 17

At-will partnership A partnership that continues and exists indefinitely. Chapter 18.

Availability Situations in which people assess the frequency or probability of an event by the ease with which instances or occurrences can be brought to mind. Chapter 3.

A B C D E F-H I J-L M N-O P Q-R S T U-Z