Exam 28: Government Regulation of Corporate Business

Tremendous LLC proposes to merge with Small LLC. Janice, a member of Tremendous, is opposed to this merger. The operating agreement allows mergers to be approved by a simple majority vote. Discuss the legal rights Janice may assert in this situation.

Under SEC regulations, Jane, a director of ABC Co., can profit from the purchase and sale of ABC securities in a period of six weeks.

A derivative is a financial tool that can be used to manage risks in the stock market.

If ABC Co. is to merge with XYZ Co., typically only a majority (51%) vote of the shareholders will be required.

An attempt at a(n) ____________ occurs when one corporation makes a tender offer to the shareholders of another corporation.

A ____________ might be used by target management if the target owns an irreplaceable piece of property, the sale of which would seriously devalue the overall worth of the target.

A lockup agreement requires that a friendly suitor is given an option to buy a valuable piece of property owned by the target corporation should a hostile bidder gain control of the corporation.

To support his efforts in the writing of a new novel, Madden sold various patrons an interest in the forthcoming novel. The patrons agreed to supply him with money in exchange for a return on their investments out of any profits Madden made in the sale of the novel. Could this scheme be considered a sale of securities? Why or why not?

A ____________ means the exclusive control of a market by a business enterprise.

In a ____________, a target corporation uses news releases, advertisements, and press conferences to convince shareholders to retain present management.

Mill enterprises needs to raise a large amount of money. To raise the money, it sells its fractional interest in orange groves, located in Florida, to Sunshine Co. in New York. Sunshine Co. would be ensured a return in investment from the land purchased. Mill enterprises has sold:

Yanasko wanted to purchase Raymond-Mason Inc. When he approached the board of directors about the merger, they told him that they were not interested. Yanasko then suggested an asset acquisition. Again, the board refused. What measure could Yanasko take to sidestep the board of directors and obtain control of Raymond-Mason? Explain.

EA Games Industries is a manufacturer of home video game machines and home video games. Johnson Department Store wants to market the home video games, but EA refuses to sell the games unless Johnson also agrees to purchase the home video machines. A court will most likely find such a restriction to be a(n):

Homeruns Co. manufactures baseball bats. It withdrew deals from a few retailers who refused to put a particular price tag, as decided by Homeruns Co, on the bats. This act of Homeruns Co.:

The Hart-Scott-Rodino Antitrust Act is designed to police any expansion attempts that might hurt competition in the marketplace.

The Pillsbo Corporation failed to file annual reports for three years. The Secretary of State in the state where Pillsbo incorporated told Pillsbo's chief executive officer that she was going to ask the state attorney general to bring a quo warranto action against Pillsbo for failing to file the annual reports. Can she legally do so for this reason? Why or why not?

Matrix Corp. falsely advertises on national television a device that allows a car engine to run on water. When the FTC attempts to stop this advertising, Matrix asserts that anyone should know that the advertising is false and is intended as a joke, and that it offers all persons who inquire about its advertisement a gasoline treatment supplement which does, in fact, cause engines to run cleaner, improving gasoline mileage. Discuss the likely FTC success in its attempt to stop this advertising.

In the Wickard v. Filburn case (1945), the Supreme Court declared that the private use of wheat on a single family farm could be curtailed by the federal government.

Greenmail is an offer by a target corporation to the bidder to acquire a portion of the shares, which are already held by the bidder, at a price greater than when it was originally sold.

____________ occurs when a targeted corporation makes a deal with the suitor to protect management of the target.