Exam 40: Corporations: Mergers, Consolidations, Terminations

By offering to purchase the stock of Grassroots Corporation at a price above its current market value, Grow True Corporation made a[n] ________.

The surviving entity in a merger situation is ________

After reviewing the plan to ensure that the corporations have satisfied all legal requirements,

[Green Trees] Keith, the president of Grow True Corporation, a company that provides landscaping services, wanted his corporation to purchase Grassroots Corporation, another corporation providing landscaping services. The board of Grassroots Corporation, however, did not wish to sell. The board of Grow True Corporation decided to buy any or all of Grassroots Corporation's stock in order to gain control of Grassroots Corporation. The management of Grassroots Corporation and its board strongly objected to the attempt by Grow True Corporation to take over the company. Grow True Corporation offered to purchase stock held by Grassroots shareholders at a price substantially above the current market value of the stock. When that strategy was not wholly successful, Grow True Corporation offered to give shareholders of Grassroots Corporation stock in Grow True Corporation in return for their Grassroots Corporation stock. -Which of the following terms describes Grow True Corporation in its attempt to buy any or all of Grassroots Corporation's voting shares

Merger cannot occur between foreign (out-of-state) corporations.

[Corporate Death] Janelle is president and a large shareholder in RecyCALL, a corporation that sells used cellular telephones. Although the company was not insolvent, sales had been significantly down, and Janelle decided that it would be a good idea to discontinue the business. The board of directors agreed with her. The board members presented the proposal to discontinue the corporation to shareholders. Initially, Ahmed, a disgruntled shareholder, opposed ending the corporation. He claimed that the problem was that Janelle had done a poor job in management. Janelle planned to go forward with the termination of the company because a majority of the shareholders agreed. Ahmed, however, came around; and upon a second vote to discontinue the corporation, the vote was unanimous. Tony, a vice president of the corporation, was aware of a few outstanding debts owed by RecyCALL. He suggested hurrying along quietly with ending the corporation because any claims not made before the corporation was dissolved could be avoided. Janelle told him that she was not sure that was a good idea. Therefore, the company proceeded with all appropriate notifications. When the time came to liquidate the corporation, the members of the board did not want to participate. Janelle was concerned about what action to take at that point because she really wanted to be finished with RecyCALL. -Which of the following is the proper term for the plan to discontinue RecyCALL?

Armando Investment Group wants to take over TechInfo. Armando offers several key shareholders of TechInfo a price above full market value for their stock. What type of takeover is Armando contemplating?

A merger or consolidation plan must be approved only by the boards of directors of the most prominent of the merging or consolidating company.

Which of the following statements is true about procedures for appraisal rights of dissenting shareholders?

[Gaming Merger] Calvin and Daniella each own 5% of GamePower, a video game design company. GamePower is seeking to merge with GameKing, and before a shareholder meeting, Calvin and Daniella email all other shareholders and corporate representatives about their disagreement with the proposed transaction. At the shareholder meeting, they vote against the merger with GameKing, but, 90% of the shareholders vote in favor of the merger. Calvin tells Daniella that it is not fair that they are forced to be part of GameKing. Daniella tells him they have no choice, so get used to it. -What, if any, option do Calvin and Daniella have if they do not want to be part of the merged corporation?

Shareholder approval is not required for consolidation.

According to the text, there are three circumstances under which a corporation acquiring assets assumes the liabilities of the selling corporation. Please list all three circumstances.

Mergers and consolidations are considered the same thing under the law.

[Battle for the Board] The Board of Directors of InfoHub, an internet service provider, contains 9 directors. Two of the directors, Jude and Rostan, decide they want to replace several of the directors with individuals who support their position and then take over the Board and control the company. Jude thinks it's a long shot, but Rostan tells him they could do it because Rostan has gradually been accumulating shares and they can get a majority of proxies on their side. Jude says the proxies are not important, because it's the shareholders that vote for the members of the board but it is difficult for them to find the names of shareholders. Rostan tells him not to worry, because he will get the shareholder list and focus only a few key shareholders, then get their proxies on his side before the next shareholder meeting. -Is InfoHub likely to refuse to provide the shareholder list?

When an asset purchase occurs, the acquiring corporation assumes ownership and control over tangible, but not intangible, assets of the selling corporation.

Which of the following results in a "chose in action"?

Dissolution is the process by which a board of directors converts a corporation's assets into cash and distributes them among creditors and shareholders.

Which of the following was a finding of the court in Shiftan v. Morgan Joseph Holdings Inc., the case in the text involving stock appraisal rights following a merger?

[Skateboard Growth] Both Tyler and Byron were presidents of small corporations involved with manufacturing and selling skateboards. Tyler's store was called "Thrasher Skateboard" and Byron's business was called "Skateboard for Health." Because a large sports store was coming into town, they, along with the boards of directors of the two companies and all shareholders, decided that it would be a good idea to combine the businesses. They decided to retain the name "Skateboard for Health." However, Tyler was concerned with the change because, on behalf of his company, he was contemplating filing a lawsuit against Sean who had purchased 10 custom skateboards and had not paid for them. He was excited, however, about the prospect of not being liable for a lawsuit he expects to be filed by Alec who fell and sustained a serious ankle sprain and medical bills when a wheel came off of a skateboard sold by Tyler's corporation. After investigation, Tyler is aware that the wheel was negligently attached to the skateboard. Tyler told Byron that one reason he wanted to retain Byron's name was to prevent Alec from being able to recover against him. -Which of the following is the appropriate term for the action contemplated by Tyler and Byron to combine the businesses under the name "Skateboard for Health"?

When involuntary dissolution occurs, courts automatically appoint a receiver.