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Duty of Loyalty

The duty of loyalty is a default fiduciary duty that anyone acting on behalf of a corporation owes to the business. This duty requires that the individual’s actions taken on behalf of the business be in the business’s best interest, rather than personal interest. One cannot engage in self-dealing and if one does, it must be entirely fair and would not be protected by the business judgment rule.

Duty of Care

The duty of care is one of the default fiduciary duties that anyone acting on behalf of a business owes to the business. This duty requires that the individual act in the way a reasonable person would when acting on behalf of the business.

Double Taxation

The term used to describe the taxing of C-Corporation’s earnings at both the corporate level, and again to the shareholder personally when shareholder dividends are distributed. In practice few small business C-corporations pay double tax because most pay reasonable salaries that reduce the taxable income to less than $50,000, which is only a 15% tax rate. Then the funds are often borrowed out to avoid paying dividend taxes.

Domestication

The process by which a non-US based company changes its domicile to Delaware so as to be governed under Delaware law. This is a two-step process: First form a new Delaware Corporation or LLC and second, merge the non-US entity into the new Delaware entity. The domestication, sometimes called a domestication, preserves the continuity of the company. It also allows a foreign corporation to become a Delaware LLC, the preferred choice of entity for international business and asset holding. Should you wish to order a domestication whether it be for owning real estate in Spain and wanting that to be in a Delaware LLC rather than a Chanel Islands LLC or if you have a yacht in Turkey that you want incorporated under a Delaware LLC.

Division of Corporations

A division of the Delaware Secretary of State’s office that handles incorporation of business entities.

Dividends

Distributions of a company’s earnings to its owners/shareholders.

Dissolve

To terminate/end the existence of a Corporation, LLC, or Partnership.

Dissolution

The formal procedure to wind-down the operations of a Corporation, LLC, or Partnership.

Discovery

The pre-trial phase of a lawsuit in which each party can request and receive certain information from the other parties. This phase also allows for the usage of subpoenas, depositions, interrogatories (written questions), and requests for admissions.

Director

A director is a member of a board of directors that manages the affairs of a corporation. All Delaware corporations must have at least one director. The directors are elected by the stockholders and the directors appoint the officers. The directors must meet at least once per year.

Direct Hit Trademark Search

A trademark search of the US Patent and Trademark official records and the records of all 50 states’ trademark databases. It does not include a “common law search” of telephone directories, but does include some “truncated versions” of the name searched so as to help locate confusingly similar names and not simply identical name filings.

“Delaware Loophole”

This refers to Delaware not taxing intangible property, such as leases, royalties, and patents. The “Delaware loophole” is one of the reasons many holding companies are formed in Delaware.

Delaware LLC Act (6 Del. C. 18-101 et seq.)

This Act is the law which governs LLCs in the State of Delaware. The internal affairs of an LLC formed in the State of Delaware are governed by the Act. Every LLC is required to have an LLC Operating Agreement – a private partnership agreement, usually in writing, signed by the members of an LLC – which often contracts around the default provisions in the Act (that governs in the absence of an agreement to the contrary).

Deed of Trust

A mortgage or type of lien on real property (land and structures or “dirt, sticks and bricks”) where legal title to the mortgaged property is transferred to a trustee until the mortgage is satisfied.

Debtor

A person or company that owes a financial obligation to one or more creditors. Often this is to repay money or to pay for breaches of an obligation. A judgment debtor is one who a court has ruled in favor of, who has a judgment lien on debtors’ assets. A debtor may also voluntarily secure the debt to a creditor by pledging collateral in the form of tangible or intangible property.

D.C.I.S. (Delaware Corporation Imaging System)

The online MS-DOS based mainframe computer used to file and store Delaware corporate records with the Delaware Secretary of State. This system is soon to be replaced by “ICIS” a web-based system.

D.B.A. (“Doing Business As”)

Any name that is used by an individual sole proprietor, a Corporation, LLC or Partnership, which differs from the name that was registered with the Secretary of State. This is also known as a trade name or fictitious name and to file this document on public record provides public notice of this second alternate name.