A Glossary Of Essential Corporate Legal Terms

Gaurav Shanker    |   

A Glossary Of Essential Corporate Legal Terms-Gaurav Shanker.jpg

Every industry has its own language and terms. These words and phrases can be confusing to anyone who is not part of the daily operations of a specific industry, and corporate law is no exception. To help you understand the terms, acronyms, and phrases regularly used when dealing with corporate law, Business Law Chamber has created this handy reference guide. Here you’ll find valuable information allowing you to comprehend the various terms used and help you communicate with your lawyers and business partners more effectively.

Alter Ego.

A doctrine of law which disregards the principle of limited liability enjoyed by a corporate entity when it is proven that, in fact, no separate identity of the individual and corporation exists.

Blue Sky Law.

A term used to describe state laws and regulations governing the issuance and sale of securities to residents of a state and the licensing and regulation of securities brokers and dealers as well as anti-fraud provisions. These laws protect the public from deceptive securities transactions and vary from state to state.

Corporate Seal.

A Corporate Seal is a device made to either emboss or imprint specific company information onto documents. This information usually includes the company’s name and date and state of formation. Corporate seals are often required when opening corporate or LLC bank accounts, distributing stock or membership certificates or conducting other corporate business.

Derivative Suit.

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

Double Taxation.

Double taxation is a taxation principle referring to income taxes paid twice on the same source of earned income. It can occur when income is taxed at both the corporate level and personal level. Double taxation also occurs in international trade when the same income is taxed in two different countries.

Equity Financing.

A method of raising capital in which a corporation sells shares of stock.

Pari Passu.

It is a Latin phrase that means “at the same time”, and in usage often refers to treating things equally, without showing preferences. In the context of finance, it refers to a loan or investment having equal rights of payment, i.e., having the same level of seniority. In the context of bankruptcy, it refers to creditors receiving a pro rate share of payment, according to the amount of the claim.

Tax Heaven.

It is a country that offers foreign individuals and businesses little or no tax liability in a politically and economically static environment.

Share or Stock Swap.

A share swap is a strategy used during a merger or acquisition of a company. A share swap occurs when shareholders’ ownership of the target company's shares are exchanged for shares of the acquiring company as part of a merger or acquisition. During a share swap, each company’s shares must be accurately valued in order to determine a fair swap ratio.

Venture Capital Fund.

Venture capital funds are investment funds that manage the money of investors who seek private equity stakes in startup and small- to medium-sized enterprises with strong growth potential. These investments are generally characterized as high-risk or high-return opportunities.

Corporate Governance.

Corporate governance is the system of rules, practices, and processes by which a firm is directed and controlled. Corporate governance essentially involves balancing the interests of a company’s many stakeholders, such as shareholders, management, customers, suppliers, financiers, government and the community.

Insider Trading.

Insider trading is the buying or selling of a security by someone who has access to material nonpublic information about the security. Insider trading can be illegal or legal depending on when the insider makes the trade. It is illegal when the material information is still nonpublic.

Hostile Takeover.

A takeover that occurs without the approval of the target corporation’s board of directors. It is the acquisition of one company (called the target company) by another (called the acquirer) that is accomplished by going directly to the company’s shareholders or fighting to replace management to get the acquisition approved.


An underwriter is any party that evaluates and assumes another party's risk for a fee, such as a commission, premium, spread or interest. Underwriters operate in many aspects of the financial world, including the mortgage industry, insurance industry, equity markets, and common types of debt securities.

Due Diligence.

It is an investigation of a business or person before signing a contract, or an act with a certain standard of care.

If you’re looking for the best corporate lawyers in India for USA, Australia, Canada, and UK firms, reach out to the experts at Business Law Chamber. We boast of excellence and more than fifty years of combined experience in the corporate laws of India and mainly represent clients from the USA, Australia, Canada, and the UK. We are located in New Delhi, Kolkata, and Singapore, and represent clients and provide complete assistance on legal matters by hand-holding clients and offering complete transparency.

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