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A B C D E F-H I J-L M N-O P Q-R S T U-Z S corporation A corporation that has elected to be taxed under Subchapter S of the Internal Revenue Code. S corporations are not taxed separately. Profits and losses are allocated directly to the shareholders who include those profits or losses on their own tax returns. Chapter 20.
Sales skim A fraud in which the perpetrator sells company products ostensibly on behalf of the company, but diverts the proceeds to himself or herself. Chapter 12.
Salvage value The value of a nonoperating asset derived from the value of its components. Chapter 3.
Sarbanes-Oxley Act of 2002 A federal act that constrains public corporation board power first, by requiring that the corporation have an audit committee of independent directors who retain and oversee the corporation's independent accounting firm; and second, by requiring senior officers to certify the corporation's financial statements and to certify that the corporation has a Caremark system of effective internal controls. Chapter 14.
Scienter The element of Rule 10b-5 liablity that requires a defendant to have intended to deceive. Chapter 7.
Scope of employment An employee acts within the scope of employment when performing work assigned by the employer or engaging in a course of conduct subject to the employer's control. Chapter 4.
Scrap value See Salvage value. Chapter 3.
Scratch Money.
Secondary trading market Markets such as the New York Stock Exchange or NASDAQ that permit securities to be traded among participants who are not issuing corporations. Chapter 6.
Securities The standardized rights granted by a corporation in return for money investments. Stock, bonds, and debentures are typical securities. Chapter 6.
Securities Act (or the '33 Act) One of two major federal acts that regulate the public issuance and trading of securities. Chapter 6.
Securities analyst Securities analysts investigate a particular industry and its businesses and write analytical assessments of both the industry and the businesses that compete. These analyses are used by brokerage houses to recommend stock to their clients. Chapter 14.
Securities and Exchange Commission (SEC) An independent federal agency that has regulates publicly held companies and stock exchanges. Chapter 6.
Self dealing Self dealing occurs when a director or officer enters into a contract with the corporation, usually to buy something from, or sell something to, the corporation. Chapter 11.
Series of stock A subset of a class of stock. Chapter 6.
Settled When a securities trade becomes complete, meaning the seller gets the money and the buyer gets the shares. Chapter 15.
Share A unit of ownership in a corporation. Chapter 6.
Shareholder The owner of stock. Chapter 6.
Shareholder lock-up A side agreement between an acquirer and a target's controlling shareholder by which the shareholder agrees to sell its shares, or agrees to give a proxy, to the acquirer. Chapter 17.
Shareholder primacy The idea that, because shareholders own the corporation, directors and officers are required to act in the shareholders' interest. Chapter 10
Shareholders' rights plan Formal term for a poison pill. Chapter 17.
Shark repellents Corporate governance structures that keep unwanted suitors from effecting a takeover. Chapter 17.
Shirking A moral hazard faced by principals, in which the agent chooses to perform less well than the parties anticipated. Chapter 4.
Short form merger Where the acquiring corporation owns at least 90% of the target's stock, the statutes permit a merger upon only the resolution of the acquiring corporation's board of directors. Chapter 17.
Shrapnel Money.
Signaling Tactics used by both principals and agents to convince others that they will perform well in an agency relationship. Signaling may include such actions as providing references or obtaining educational degrees. Chapter 4.
Silent partners Partners who do not take part in the management of the business. Chapter 18.
Simoleons Money.
Simple majority A majority of votes cast. Votes not present and votes present but not voting are not included in calculating the denominator. Chapter 15.
Sinking fund Money segregated by a borrowing corporation to ensure that it can make loan payments when due. Chapter 6.
Soap Money.
Solicitors British lawyers who were not admitted to the bar and could not be heard in court. They undertook all other legal work, however, including what today would be called corporate work. Chapter 1.
Special committee A committee of non-implicated directors assigned to evaluate a shareholder's demand for litigation against other directors. Chapter 15.
Special litigation committee A committee of nondefendant directors assigned to investigate the allegations against the defendant directors who are being sued for breach of fiduciary duties. The committee also recommends whether pursuing those allegations is in the best interest of the corporation. Chapter 13.
Special meeting A board meeting other than a regular meeting. A shareholder meeting other than the annual meeting. Chapter 9 and Chapter 15.
Special purpose clause A clause in the article of incorporation that states the single purpose for which the corporation was formed. Chapter 10.
Spinach Money.
Spondulicks Money.
Staggered terms A corporate governance device in which the directors are divided into two or three classes, with each class holding terms of two or three years, so that only one class of directors is elected each year. Chapter 9.
Statement of cash flows A financial statement that presents the net cash used in three areas over a period of time. Chapter 3.
Statement of income A financial statement that presents revenues and expenses over a period of time. Chapter 3.
Statutory voting See Straight voting. Chapter 16.
Stock Collective ownership interests in the corporation, used interchangeably with shares. Chapter 6.
Stock right Rights given to the holders of stock, such as the right to vote or receive dividends. Chapter 6.
Stock split The division of outstanding shares into more shares, such that the ownership interests are not affected. Chapter 7
Stockholder Someone who owns shares of stock. Chapter 6.
Straight voting A system of shareholder voting for directors. A shareholder may cast one vote for every share he or she owns for each director slot. Thus each shareholder may cast votes equaling the number of his or her shares for as many different candidates as there are slots. Also called Statutory voting. Chapter 16.
Street name Shares of stock as to which the record holder has no ownership interest but holds the stock on behalf of a brokerage house that also has no ownership interest but that, in turn, holds the stock for a customer, which is the beneficial owner. Chapter 15.
Subordinated Debt that has a lower priority for repayment than other debt. Chapter 6.
Subscription agreements Contracts to purchase shares, usually in a corporation that has not yet been formed. Chapter 6.
Subsidiary A corporation that has the majority of its voting stock owned by another corporation. Chapter 17.
Successor liability A doctrine that holds a corporation liable for the debts of a second corporation that sold all its assets to the first corporation. Chapter 8
Sugar Money.
Supermajority A provision in the articles of incorporation or bylaws that requires a greater than majority vote at either the board or the shareholder level. Chapter 16.
Superquorum A provision in the articles of incorporation or bylaws that increases the quorum requirements above the default statutory rule, for board meetings or shareholder meetings. Chapter 16.
Surplus A corporation's net assets less its capital. Chapter 7.
Syndicate A group of investors that makes a joint investment to a corporation, either by making a loan or by underwriting the corporation's public offering. Chapter 6.
Synergy value The value of operating an asset in conjunction with other assets the investor already owns. This conjoined operation might produce more profits than operating the assets separately. Chapter 3. |