Question 1

Brown Corporation purchased all of the stock of Grey Corporation. The appraisal remedy is not available to a dissenting shareholder of Brown Corporation.

Accepted Answer

A) True 
 B)False  True

Question 2

A corporation that buys the assets of another corporation does not assume the other's liability unless the:

Accepted Answer

A)  purchaser, expressly or impliedly, agrees to assume the seller's liabilities. 
B)  transaction amounts to a consolidation or merger of the two corporations. 
C)  sale is for the fraudulent purpose of avoiding the liabilities of the seller. 
D)  All of these. 
A)  purchaser, expressly or impliedly, agrees to assume the seller's liabilities. 
B)  transaction amounts to a consolidation or merger of the two corporations. 
C)  sale is for the fraudulent purpose of avoiding the liabilities of the seller. 
D)  All of these. D

Question 3

AB Corporation consolidates with ZX Corporation to form A-Z Corporation. The debts of AB Corporation are:

Accepted Answer

A)  assumed by the stockholders of AB Corporation. 
B)  discharged by the process of consolidation. 
C)  assumed by the new corporation. 
D)  discharged by the issuance of new stock in A-Z Corporation. 
A)  assumed by the stockholders of AB Corporation. 
B)  discharged by the process of consolidation. 
C)  assumed by the new corporation. 
D)  discharged by the issuance of new stock in A-Z Corporation. C

Question 4

Which of the following statements about corporate dissolution is incorrect?

Accepted Answer

A)  A creditor cannot force a corporation into dissolution. 
B)  A corporation will be dissolved if all shareholders vote to do so. 
C)  A Secretary of State may start an administrative proceeding to dissolve a corporation for failure to pay taxes. 
D)  A shareholder may petition a court to dissolve a "deadlocked" corporation. 
A)  A creditor cannot force a corporation into dissolution. 
B)  A corporation will be dissolved if all shareholders vote to do so. 
C)  A Secretary of State may start an administrative proceeding to dissolve a corporation for failure to pay taxes. 
D)  A shareholder may petition a court to dissolve a "deadlocked" corporation.

Question 5

The Revised Act takes the position that consolidations are, for all practical purposes, obsolete.

Accepted Answer

A) True 
 B)False

Question 6

If a shareholder dissents to a proposed business combination, he is entitled to receive the fair value of his shares. In order to do so, the shareholder must do which of the following?

Accepted Answer

A)  Attack the validity of the corporate action that gives rise to his right to obtain payment or to have the action rescinded 
B)  Obtain an appraisal of the value of the shares 
C)  Oppose the proposed corporate action verbally at a special meeting of the stockholders 
D)  Make a written demand upon the corporation within the set time period 
A)  Attack the validity of the corporate action that gives rise to his right to obtain payment or to have the action rescinded 
B)  Obtain an appraisal of the value of the shares 
C)  Oppose the proposed corporate action verbally at a special meeting of the stockholders 
D)  Make a written demand upon the corporation within the set time period

Question 7

When purchasers are willing to pay a premium for a block of shares that conveys control, almost all courts today
require the controlling shareholders to turn over this control premium to the corporation's treasury.

Accepted Answer

A) True 
 B)False

Question 8

A corporation may acquire all of the assets, including goodwill, of another corporation and combine them with its own through:

Accepted Answer

A)  a purchase of a controlling stock interest in such a corporation. 
B)  a merger or consolidation with such a corporation. 
C)  a purchase or lease of such assets. 
D)  All of these. 
A)  a purchase of a controlling stock interest in such a corporation. 
B)  a merger or consolidation with such a corporation. 
C)  a purchase or lease of such assets. 
D)  All of these.

Question 9

The state, a shareholder, or a creditor may bring a proceeding seeking judicial dissolution.

Accepted Answer

A) True 
 B)False

Question 10

A consolidation:

Accepted Answer

A)  has precisely the same result as a merger. 
B)  is the most typical form of business combination used today. 
C)  is always illegal (in contrast to mergers, which are legal under state law). 
D)  requires the assent of the board of directors and shareholders of each corporation. 
A)  has precisely the same result as a merger. 
B)  is the most typical form of business combination used today. 
C)  is always illegal (in contrast to mergers, which are legal under state law). 
D)  requires the assent of the board of directors and shareholders of each corporation.

Question 11

The Revised Act grants dissenters' rights to:

Accepted Answer

A)  a shareholder when any amendment to the articles of incorporation materially and adversely affects that dissenter's rights regarding his shares. 
B)  dissenting shareholders of a corporation leasing substantially all of its assets in the usual course of business. 
C)  dissenting shareholders of each corporate party to a short-form merger. 
D)  All of these. 
A)  a shareholder when any amendment to the articles of incorporation materially and adversely affects that dissenter's rights regarding his shares. 
B)  dissenting shareholders of a corporation leasing substantially all of its assets in the usual course of business. 
C)  dissenting shareholders of each corporate party to a short-form merger. 
D)  All of these.

Question 12

Management buyouts commonly make extensive use of borrowed funds.

Accepted Answer

A) True 
 B)False

Question 13

If Yeron Corporation buys all of the assets of Aeron Corporation:

Accepted Answer

A)  Yeron becomes a parent corporation. 
B)  Aeron is merged into Yeron. 
C)  Aeron's board is dissolved and replaced by Yeron's. 
D)  None of these. 
A)  Yeron becomes a parent corporation. 
B)  Aeron is merged into Yeron. 
C)  Aeron's board is dissolved and replaced by Yeron's. 
D)  None of these.

Question 14

Larson & Son manufactured welders that frequently malfunctioned, setting clothing on fire and causing serious burns. Larson & Son sold all of its assets to Swenson Co., which continued to manufacture the Larson welder product line. Eighteen months after Swenson's purchase, one of Larson's customers sued Swenson for injuries caused by a welder purchased from Larson, one year prior to the purchase by Swenson. Under the circumstances, Swenson Co.:

Accepted Answer

A)  cannot be held liable, because it is a corporation. 
B)  cannot be held liable, because it did not manufacture the welder in question. 
C)  might be held liable for this debt in some states under strict tort liability. 
D)  could not be liable if Larson & Son still existed as a corporate entity. 
A)  cannot be held liable, because it is a corporation. 
B)  cannot be held liable, because it did not manufacture the welder in question. 
C)  might be held liable for this debt in some states under strict tort liability. 
D)  could not be liable if Larson & Son still existed as a corporate entity.

Question 15

If Sean, a shareholder, dissents to a corporate merger, his appraisal remedies will be:

Accepted Answer

A)  fair value of his shares as of the day the corporation agrees to purchase the shares. 
B)  fair value of the shares as of the time immediately before the action to which he objects is taken. 
C)  average purchase price for the shares during the preceding 30 days. 
D)  None of these. 
A)  fair value of his shares as of the day the corporation agrees to purchase the shares. 
B)  fair value of the shares as of the time immediately before the action to which he objects is taken. 
C)  average purchase price for the shares during the preceding 30 days. 
D)  None of these.

Question 16

The 2002 amendments to the Revised Act provide for procedures permitting:

Accepted Answer

A)  a corporation to change its state of incorporation. 
B)  a domestic business corporation to become a domestic or foreign partnership or LLC. 
C)  Both of these. 
D)  Neither of these. 
A)  a corporation to change its state of incorporation. 
B)  a domestic business corporation to become a domestic or foreign partnership or LLC. 
C)  Both of these. 
D)  Neither of these.

Question 17

A "short-form merger" requires shareholder approval of both corporations.

Accepted Answer

A) True 
 B)False

Question 18

The remedy of appraisal is allowed to a dissenting shareholder if:

Accepted Answer

A)  the stock price goes down. 
B)  the shareholder does not vote by proxy. 
C)  the stock is split. 
D)  None of these. 
A)  the stock price goes down. 
B)  the shareholder does not vote by proxy. 
C)  the stock is split. 
D)  None of these.

Question 19

The combination of two or more corporations' total assets, title to which is vested in one of them, which is known as the surviving corporation, is a:

Accepted Answer

A)  dissolution. 
B)  liquidation. 
C)  consolidation. 
D)  merger. 
A)  dissolution. 
B)  liquidation. 
C)  consolidation. 
D)  merger.

Question 20

In many states, dissolution that is nonjudicial may be brought about when:

Accepted Answer

A)  all the shareholders agree to dissolve, even without action by the board. 
B)  the board of directors agrees to dissolve. 
C)  the creditors petition the court. 
D)  the business of the corporation becomes obsolete. 
A)  all the shareholders agree to dissolve, even without action by the board. 
B)  the board of directors agrees to dissolve. 
C)  the creditors petition the court. 
D)  the business of the corporation becomes obsolete.

Exam 36: Fundamental Changes

Brown Corporation purchased all of the stock of Grey Corporation. The appraisal remedy is not available to a dissenting shareholder of Brown Corporation.

A corporation that buys the assets of another corporation does not assume the other's liability unless the:

AB Corporation consolidates with ZX Corporation to form A-Z Corporation. The debts of AB Corporation are:

Which of the following statements about corporate dissolution is incorrect?

The Revised Act takes the position that consolidations are, for all practical purposes, obsolete.

If a shareholder dissents to a proposed business combination, he is entitled to receive the fair value of his shares. In order to do so, the shareholder must do which of the following?

When purchasers are willing to pay a premium for a block of shares that conveys control, almost all courts today require the controlling shareholders to turn over this control premium to the corporation's treasury.

A corporation may acquire all of the assets, including goodwill, of another corporation and combine them with its own through:

The state, a shareholder, or a creditor may bring a proceeding seeking judicial dissolution.

A consolidation:

The Revised Act grants dissenters' rights to:

Management buyouts commonly make extensive use of borrowed funds.

If Yeron Corporation buys all of the assets of Aeron Corporation:

If Sean, a shareholder, dissents to a corporate merger, his appraisal remedies will be:

The 2002 amendments to the Revised Act provide for procedures permitting:

A "short-form merger" requires shareholder approval of both corporations.

The remedy of appraisal is allowed to a dissenting shareholder if:

The combination of two or more corporations' total assets, title to which is vested in one of them, which is known as the surviving corporation, is a:

In many states, dissolution that is nonjudicial may be brought about when:

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