Question 1

A compulsory share exchange happens when two companies wish to merge into one.

Accepted Answer

A) True 
 B)False  False

Question 2

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

Accepted Answer

A) True 
 B)False  False

Question 3

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 some state laws). 
D)  requires the assent of both corporations' board of directors and shareholders. 
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 some state laws). 
D)  requires the assent of both corporations' board of directors and shareholders. D

Question 4

After an amendment to the corporate charter has been approved, it must be filed with the secretary of state.

Accepted Answer

A) True 
 B)False

Question 5

If Barker Co. buys 51% of the shares of Carter Co.:

Accepted Answer

A)  Carter Co.'s board would have to approve the sale. 
B)  Barker Co.'s board would have to approve the sale. 
C)  both boards would have to approve the sale. 
D)  both sets of shareholders would have to approve the sale. 
A)  Carter Co.'s board would have to approve the sale. 
B)  Barker Co.'s board would have to approve the sale. 
C)  both boards would have to approve the sale. 
D)  both sets of shareholders would have to approve the sale.

Question 6

The right of dissent results in payment of:

Accepted Answer

A)  a damage award to the shareholder. 
B)  a price in exchange for his shares. 
C)  treble damages for violation of the charter. 
D)  a bonus to dissenting shareholders. 
A)  a damage award to the shareholder. 
B)  a price in exchange for his shares. 
C)  treble damages for violation of the charter. 
D)  a bonus to dissenting shareholders.

Question 7

The combination of two or more corporations' total assets, title to which is vested in one of them, 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 8

The management of Corporation A forms Corporation B. Corporation B issues bonds to institutional investors to raise cash, with which it purchases the assets or stock of Corporation A. The assets of Corporation A are used as security for the bonds issued by Corporation B. This action by management is best described as a:

Accepted Answer

A)  leveraged buyout. 
B)  cash-out combination. 
C)  short-form merger. 
D)  compulsory share exchange. 
A)  leveraged buyout. 
B)  cash-out combination. 
C)  short-form merger. 
D)  compulsory share exchange.

Question 9

Under the Revised Act, Bentry Corporation's transfer of some of its assets to its wholly owned subsidiary is considered a sale in the regular course of business.

Accepted Answer

A) True 
 B)False

Question 10

A(n) __________ is a general invitation to all of the shareholders of a target company to tender their shares for sale at a specified price.

Accepted Answer

A)  compulsory share exchange. 
B)  tender offer. 
C)  buyout. 
D)  None of these. 
A)  compulsory share exchange. 
B)  tender offer. 
C)  buyout. 
D)  None of these.

Question 11

The courts may grant a petition of involuntary dissolution if shareholders:

Accepted Answer

A)  do not approve of fundamental changes of the board. 
B)  show that the corporation has not kept adequate records or filed annual reports. 
C)  did not receive their dividends. 
D)  show that corporate assets are being squandered. 
A)  do not approve of fundamental changes of the board. 
B)  show that the corporation has not kept adequate records or filed annual reports. 
C)  did not receive their dividends. 
D)  show that corporate assets are being squandered.

Question 12

Which of the following statements about corporate dissolution is INCORRECT?

Accepted Answer

A)  A corporation cannot be forced into dissolution by a creditor. 
B)  A corporation will be dissolved if all shareholders vote to do so. 
C)  A secretary of state may commence a proceeding to dissolve a corporation for failure to pay taxes. 
D)  A shareholder may petition a court to dissolve a "deadlocked" corporation. 
A)  A corporation cannot be forced into dissolution by a creditor. 
B)  A corporation will be dissolved if all shareholders vote to do so. 
C)  A secretary of state may commence a proceeding to dissolve a corporation for failure to pay taxes. 
D)  A shareholder may petition a court to dissolve a "deadlocked" corporation.

Question 13

Which of the following is NOT a basis for involuntary dissolution?

Accepted Answer

A)  A proceeding initiated by the secretary of state, if it is established that the corporation failed to pay its franchise tax. 
B)  The directors are deadlocked and the shareholders cannot break the deadlock. 
C)  The shareholders dissent to a merger and are asserting their appraisal rights. 
D)  None of these. 
A)  A proceeding initiated by the secretary of state, if it is established that the corporation failed to pay its franchise tax. 
B)  The directors are deadlocked and the shareholders cannot break the deadlock. 
C)  The shareholders dissent to a merger and are asserting their appraisal rights. 
D)  None of these.

Question 14

Cash-out combinations are used to eliminate minority shareholders by forcing them to accept cash or property for their shares.

Accepted Answer

A) True 
 B)False

Question 15

The combination of two or more corporations into a new corporation is known as:

Accepted Answer

A)  merger. 
B)  consolidation. 
C)  compulsory share exchange. 
D)  short-form merger. 
A)  merger. 
B)  consolidation. 
C)  compulsory share exchange. 
D)  short-form merger.

Question 16

If Sean, a shareholder who dissents to a corporate action, is entitled to appraisal remedies, they will be the:

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 immediately before the action to which he objects is taken. 
C)  average purchase price for the shares during the preceding 30 days. 
D)  par value of the shares as set forth in the articles of incorporation.. 
A)  fair value of his shares as of the day the corporation agrees to purchase the shares. 
B)  fair value of the shares immediately before the action to which he objects is taken. 
C)  average purchase price for the shares during the preceding 30 days. 
D)  par value of the shares as set forth in the articles of incorporation..

Question 17

Discuss the similarity between a management buyout and a cash-out combination.

Accepted Answer

Cash-out combinations are used to elimin

Question 18

a. When may the attorney general of a state seek judicial action to dissolve a corporation? 
b. When may the shareholders of a corporation seek to dissolve it? 
c. When may the creditors of a corporation seek to dissolve it?

Accepted Answer

a. An attorney general may seek to disso

Question 19

The attorney general of the state of incorporation may bring a court action to dissolve a corporation if the corporation obtained its charter through fraud.

Accepted Answer

A) True 
 B)False

Question 20

In which of the following situations may a nonjudicial dissolution of a corporation occur?

Accepted Answer

A)  By shareholders of a close corporation who elect in the articles of incorporation to have the power to dissolve the corporation. 
B)  By expiration of the time period provided in the articles of incorporation. 
C)  By voluntary action on the part of all of the holders of outstanding stock. 
D)  A nonjudicial dissolution may occur in all of the above ways. 
E)  A corporation may only be dissolved by judicial action. 
A)  By shareholders of a close corporation who elect in the articles of incorporation to have the power to dissolve the corporation. 
B)  By expiration of the time period provided in the articles of incorporation. 
C)  By voluntary action on the part of all of the holders of outstanding stock. 
D)  A nonjudicial dissolution may occur in all of the above ways. 
E)  A corporation may only be dissolved by judicial action.

Exam 36: Fundamental Changes of Corporations

A compulsory share exchange happens when two companies wish to merge into one.

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

A consolidation:

After an amendment to the corporate charter has been approved, it must be filed with the secretary of state.

If Barker Co. buys 51% of the shares of Carter Co.:

The right of dissent results in payment of:

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

Under the Revised Act, Bentry Corporation's transfer of some of its assets to its wholly owned subsidiary is considered a sale in the regular course of business.

A(n) __________ is a general invitation to all of the shareholders of a target company to tender their shares for sale at a specified price.

The courts may grant a petition of involuntary dissolution if shareholders:

Which of the following statements about corporate dissolution is INCORRECT?

Which of the following is NOT a basis for involuntary dissolution?

Cash-out combinations are used to eliminate minority shareholders by forcing them to accept cash or property for their shares.

The combination of two or more corporations into a new corporation is known as:

If Sean, a shareholder who dissents to a corporate action, is entitled to appraisal remedies, they will be the:

Discuss the similarity between a management buyout and a cash-out combination.

a. When may the attorney general of a state seek judicial action to dissolve a corporation? b. When may the shareholders of a corporation seek to dissolve it? c. When may the creditors of a corporation seek to dissolve it?

The attorney general of the state of incorporation may bring a court action to dissolve a corporation if the corporation obtained its charter through fraud.

In which of the following situations may a nonjudicial dissolution of a corporation occur?

Introduction to Law

Business Ethics

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Intentional Torts

Negligence and Strict Liability

Introduction to Contracts

Mutual Assent

Conduct Invalidating Assent

Consideration

Illegal Bargains

Contractual Capacity

Contracts in Writing

Third Parties to Contracts

Performance, Breach, and Discharge

Contract Remedies

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Product Liability: Warranties and Strict Liability

Sales Remedies

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits, Collections, and Funds Transfers

Relationship of Principal and Agent

Relationship With Third Parties

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Nature and Formation of Corporations

Financial Structure of Corporations

Management Structure of Corporations

Secured Transactions and Suretyship

Bankruptcy

Securities Regulation

Intellectual Property

Employment Law

Antitrust

Accountants Legal Liability

Consumer Protection

Environmental Law

International Business Law

Introduction to Property, Property Insurance, Bailments, and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

Trusts and Wills

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