Deck 40: Corporations: Mergers, consolidations, terminations

Question 1

Which of the following is generally false regarding the surviving entity in a merger situation?

A)The surviving entity remains a single corporation.
B)The surviving entity obtains the absorbed corporation's assets.
C)The shareholders of the surviving entity must amend its articles of incorporation according to the specific conditions of the merger.
D)The surviving entity obtains the absorbed corporation's rights,powers,and privileges.
E)The surviving entity does not become liable for debts of the absorbed corporation.

Answer 1

E
Explanation: A)The surviving corporation becomes liable for all debts and obligations of the
absorbed corporation.
B)The surviving corporation becomes liable for all debts and obligations of the absorbed corporation.
C)The surviving corporation becomes liable for all debts and obligations of the absorbed corporation.
D)The surviving corporation becomes liable for all debts and obligations of the absorbed corporation.
E)The surviving corporation becomes liable for all debts and obligations of the absorbed corporation.

Question 2

A legal contract that combines two or more corporations such that only one of the corporations continues to exist is referred to as which of the following?

A)A reorganization
B)A combination
C)An alteration
D)A merger
E)A consolidation

Answer 2

D
Explanation: A)A merger occurs when a legal contract combines two or more corporations such
that only one of the corporations continues to exist.
B)A merger occurs when a legal contract combines two or more corporations such that only one of the corporations continues to exist.
C)A merger occurs when a legal contract combines two or more corporations such that only one of the corporations continues to exist.
D)A merger occurs when a legal contract combines two or more corporations such that only one of the corporations continues to exist.
E)A merger occurs when a legal contract combines two or more corporations such that only one of the corporations continues to exist.

Question 3

Aggressors often try to win the favor of a few institutional investors that own large blocs of shares.

Answer 3

True

Question 4

Takeovers to which the management of the target corporation objects are called hostile takeovers.

Question 5

Federal regulations prohibit the management of target companies from using corporate funds to educate shareholders on the disadvantages of a takeover.

Question 6

When merger or consolidation is at issue,some states deny the right to vote and receive dividends to dissenting shareholders who exercise their appraisal rights.

Question 7

Today,consolidations are very rare.

Question 8

Target corporations are not required by federal securities law to assist aggressors in any way.

Question 9

Although an acquiring corporation can buy another corporation's voting shares,the acquiring corporation cannot buy all of another corporation's voting shares.

Question 10

The surviving corporation's right to sue for debt and damages on behalf of the absorbed corporation is called which of the following?

A)A chose in action
B)A right of litigation
C)A course of recovery
D)A right of recovery
E)An accord and satisfaction

Question 11

Asset purchases are similar to mergers and consolidations because a corporation that purchases the assets of another corporation generally acquires its liabilities.

Question 12

In a consolidation,the surviving or consolidated corporation compensates shareholders of the corporation that no longer exists.

Question 13

In a merger situation,which of the following is a term for the corporation that does not continue to exist?

A)The removed corporation
B)The deceased corporation
C)The declined corporation
D)The concealed corporation
E)The absorbed corporation

Question 14

Shareholder approval is not required for consolidation.

Question 15

In a merger situation,which of the following is a term for the remaining corporation?

A)The remaining corporation
B)The approved corporation
C)The surviving corporation
D)The resulting corporation
E)The winning corporation

Question 16

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

Question 17

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

Question 18

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

Question 19

A merger or consolidation plan must be approved by the boards of directors of all involved corporations.

Question 20

When involuntary dissolution occurs,courts automatically appoint a receiver.

Question 21

Which of the following types of mergers does not require shareholder approval?

A)Access mergers
B)Short-form mergers
C)Required mergers
D)Specific mergers
E)Short-term mergers

Question 22

In which of the following does an aggressor pay cash to target shareholders?

A)Substantial tender offer
B)Asset tender offer
C)Cash tender offer
D)Hostile tender offer
E)Immediate tender offer

Question 23

In the text case,Hartleib v.Sirius Satellite Radio et al. ,shareholders of Sirius sued Sirius XM after a merger,claiming that Sirius executives decreased stock prices by entering into agreements with XM to the effect that both companies would refrain from looking at other merger deals.Which of the following was the result?

A)That the plaintiffs' statements were sufficiently specific,that the complaint was filed in a timely manner,and that the plaintiff was entitled to damages as a matter of law.
B)That the plaintiffs had no authority to proceed after the merger.
C)That the plaintiffs' generalized statements failing to identify specific wrongful acts and coming after changes in board membership were insufficient.
D)That the plaintiffs' statements,while generalized,were sufficient but that the plaintiff failed to file the complaint in a timely manner.
E)That the plaintiffs' statements were sufficiently specific,that the complaint was filed in a timely manner,and that a trial would be conducted later.

Question 24

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?

A)That the doctrine of contra proferentem,meaning that contracts are construed in accordance with standard criteria for contract interpretation,is applied when interpreting certificates of incorporation.
B)That an appraisal proceeding takes into account and considers any relevant element of value arising from the accomplishment or expectation of a merger or consolidation.
C)That standard rules of contract interpretation do not apply to the interpretation of certificates of incorporation.
D)That parol evidence,while often available,is inadmissible when interpreting certificates of incorporation.
E)That in valuing the stock at issue,the fact that the stock would have been entitled to a mandatory redemption a few months after the merger was irrelevant.

Question 25

What key piece of information does an aggressor generally need in order to gain control of a target corporation through proxies?

A)A list of target shareholders
B)The balance sheet of the target
C)The income statements of the target
D)A list of members of the board of directors of the target
E)A list of target officers

Question 26

In a short-form merger,the parent corporation must own at least percent of the outstanding shares of each class of the subsidiary's stock.

A)75
B)30
C)90
D)40
E)50

Question 27

Which of the following is generally false when a consolidation occurs?

A)The consolidated entity obtains the original corporations' assets.
B)The consolidated entity takes on the rights of the original companies.
C)The new corporation has independent legal status.
D)The consolidated entity assumes the debts of the original corporations.
E)The original corporations continue to exist legally.

Question 28

In a consolidation,shareholders of the new corporation create new articles of incorporation called ________.

A)Revised articles of incorporation
B)Independent articles of combination
C)Merged articles of incorporation
D)Revised articles of consolidation
E)Articles of consolidation

Question 29

If a merger increases the number of the surviving corporation's shares by no more than ________ percent,most states do not require the approval of the surviving corporation's shareholders.

A)5
B)20
C)30
D)15
E)10

Question 30

Which of the following occurs when a target corporation offers to buy its shareholders' stock?

A)A leveraged buyout
B)A self-tender offer
C)A challenge-tender offer
D)An illegal tender offer
E)A cross-tender offer

Question 31

Which of the following is true regarding the type of intangible item that may constitute an asset?

A)Goodwill,a company name,and a company logo all constitute types of intangible items that may constitute assets.
B)Goodwill and a company name are types of intangible items that may constitute assets,but a company logo is not.
C)A company name and a company logo are types of intangible items that may constitute assets,but goodwill is not.
D)A company name is a type of intangible item that may constitute an asset,but goodwill and a company logo are not.
E)Goodwill is a type of intangible item that may constitute an asset,but a company name and a company logo are not.

Question 32

When two or more corporations are combined,and neither of the original corporations continues to exist legally,it is called:

A)A consolidation
B)A reorganization
C)An alteration
D)A merger
E)A combination

Question 33

If a dissenting shareholder exercises an appraisal right when a proposed merger is involved,which of the following is generally used to determine the value of stock?

A)The value of shares on the day of the shareholder vote.
B)The value of shares 10 days before the shareholder vote.
C)The value of shares on the day the proposed merger was announced.
D)The value of shares on the day after the shareholder vote.
E)The value of shares on the day before the shareholder vote.

Question 34

To what does the term "going private" refer during a hostile takeover situation?

A)A leveraged buyout
B)A management buyout
C)A closely managed buyout
D)An approved buyout
E)A corporate buyout

Question 35

When a corporation desires to sell a majority of its assets,which of the following must it obtain?

A)Approval from shareholders,but not from officers or its board of directors.
B)Approval from officers,its board of directors,and shareholders.
C)Approval from its board of directors and shareholders,but not from officers.
D)Approval from its board of directors,but not from shareholders or officers.
E)Approval from officers and its board of directors,but not from shareholders.

Question 36

Which of the following is false regarding merger control in France?

A)If it is determined that a proposed merger exceeds a reasonable concentration of power,the minister for the economy can alter the merger's value.
B)If it is determined that a proposed merger exceeds a reasonable concentration of power,the minister for the economy can enjoin the companies from completing the merger.
C)The goal of merger control statutes in France is to discourage mergers.
D)The French government,specifically the minister for the economy,uses the Commission for Competition as a resource when determining whether a proposed merger will benefit the French economy or whether the resulting concentration of power will decrease competition.
E)If it is determined that a proposed merger exceeds a reasonable concentration of power,the minister for the economy can make provisions to ensure higher degrees of competition in the market.

Question 37

When a group within a corporation,usually management,buys all outstanding corporate stock held by the public,it is called:

A)An illegal buyout
B)An asset purchase
C)A corporate buyout
D)A management buyout
E)A leveraged buyout

Question 38

When an aggressor gradually accumulates the target company's shares,it is called:

A)Timed acquisition
B)Controlled acquisition
C)Pirate acquisition
D)Beachhead acquisition
E)Gradual acquisition

Question 39

Which of the following is false regarding the merger process in South Africa?

A)The Companies Act establishes a panel to inquire about mergers or takeovers.
B)Shareholders cannot approve a merger unless 50 percent of all shareholders vote to accept the offer.
C)If a change of corporate control takes place outside the stock exchange,the initiator of the merger must extend the offer to the shareholders and disclose all pertinent information to them within a reasonable amount of time.
D)Minority shareholders have access to South African courts and may employ them when disputes arise.
E)The Companies Act and the rules of the Johannesburg Stock Exchange control mergers.

Question 40

In the Case Opener,a decision of the Federal Trade Commission blocking a proposed merger between Polypore and Microporous Products was appealed on the basis that it would substantially lessen competition.Which of the following was the result on appeal?

A)That the Federal Trade Commission erred in asserting jurisdiction over the dispute and that the matter would be remanded to the federal district court.
B)That although the Federal Trade Commission erred in treating the merger as a horizontal merger rather than as a vertical merger,the Commission properly determined that the proposed merger would substantially lessen competition.
C)That the Federal Trade Commission erred in treating the merger as a vertical merger instead of a horizontal merger and that the proposed merger should have been allowed to proceed.
D)That the Federal Trade Commission properly determined that a horizontal merger was involved that would substantially lessen competition.
E)That the Federal Trade Commission erred in determining that the proposed merger would substantially lessen competition and that the merger should have been allowed to proceed.

Question 41

Which of the following is true regarding state approval of consolidations?

A)The secretary of state must approve consolidations so long as the corporate entity at issue has sufficient assets.
B)The secretary of state must approve consolidations so long as no more than 10% of either company's shareholders object.
C)After reviewing the plan to see that legal requirements are met,the secretary of state issues a certificate to grant approval.
D)There is no requirement that the state approve consolidations.
E)The secretary of state must approve consolidations so long as creditors of the corporate entity at issue do not remain unpaid.

Question 42

The attempt of Grow True Corporation to take over Grassroots Corporation despite the objection of management and the board of Grassroots Corporation is referred to as which of the following?

A)Surprise takeover
B)Under the table takeover
C)Planned takeover
D)Strategic takeover
E)Hostile takeover

Question 43

Which of the following is true regarding liquidation?

A)It begins immediately prior to dissolution.
B)It is the process by which the board converts the corporation's assets into cash and distributes them among the corporation's creditors and shareholders.
C)Liquidation duties fall upon officers of the corporation.
D)Liquidation is another name for dissolution.
E)It is the process by which the board provides notice to the secretary of state that the corporation will no longer remain in existence.

Question 44

Which of the following is true regarding Tyler's belief that Alec will be unable to collect anything for the accident after the joining of the businesses?

A)Tyler is correct that Alec will be unable to win in litigation against him unless Alec can establish fraud in connection with the joining.
B)Tyler is incorrect,and the joining will have no effect on the lawsuit.
C)Tyler is correct that Alec will be unable to win in litigation against him regardless of whether the lawsuit is filed before or after the joining so long as no judgment is entered prior to the joining.
D)Tyler is correct that Alec will be unable to sue him unless Alec files in court an objection to the joining and prevails.
E)Tyler is correct that Alec will be unable to win in litigation against him so long as the joining is completed before Alec files the lawsuit.

Question 45

Which of the following describes a plan set up by ABC Company whereby its other shareholders may purchase shares of ABC stock at a significantly reduced price if any individual or entity obtains a majority of ABC Company's stock?

A)Protection method
B)Beachhead defense
C)Exchange offer
D)Chose in action
E)Poison pill

Question 46

In most states,which of the following is true regarding Tyler's concern that Sean could not be sued for the price of the skateboards?

A)Sean cannot be sued unless Sean approves in writing the joining of the businesses.
B)The right to sue Sean would not be lost by the joining of the corporations.
C)Sean can be sued only if Sean purchased the skateboards within 30 days of the joining of the businesses.
D)Sean can be sued only if Sean is notified by certified letter of the joining of the businesses.
E)Sean cannot be sued if Sean purchased the skateboards within 30 days of the joining of the businesses.

Question 47

Under what circumstances may a court order an involuntary dissolution of a corporation?

A)When the corporation obtained its article of incorporation fraudulently,when the directors have abused their power,and when the corporation is insolvent.
B)When the corporation has failed to show a profit for over two years,when the corporation obtained its article of incorporation fraudulently,and when the corporation is insolvent.
C)When the corporation has failed to show a profit for over two years,when the corporation obtained its article of incorporation fraudulently,when the directors have abused their power,and when the corporation is insolvent.
D)When the corporation has failed to show a profit for over two years,when the corporation obtained its article of incorporation fraudulently,and when the directors have abused their power.
E)Only when the corporation is insolvent.

Question 48

By offering to give shareholders in Grassroots Corporation stock in Grow True Corporation in return for shares of stock in Grassroots Corporation,Grow True Corporation made a[n] ________.

A)Illegal offer
B)Stock tender offer
C)Hostile offer
D)Exchange offer
E)Control tender offer

Question 49

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

A)Cash purchase offer
B)Hostile offer
C)Substantial offer
D)Above market offer
E)Tender offer

Question 50

[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?

A)Voluntary corporate discontinuance
B)Involuntary corporate discontinuance
C)Voluntary dissolution
D)Voluntary relinquishment
E)Involuntary dissolution

Question 51

[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

A)Incentive giver
B)Pusher
C)Demander
D)Bully
E)Aggressor

Question 52

In a consolidation,which of the following is true regarding the property of the original corporations?

A)It is acquired by the new corporation.
B)It must be sold and distributed to the respective shareholders.
C)It must be held in trust for at least one year to satisfy claims of creditors.
D)It must be held in trust for at least six months to satisfy claims of creditors.
E)It must be placed within the jurisdiction of the secretary of state for at least one year in order to satisfy claims of creditors.

Question 53

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

A)The right of shareholders to dissent from the joining of the corporations for 30 days following.
B)The right of Tyler to a golden parachute if he is terminated after the joining.
C)The surviving corporation's right to sue Sean for amounts owed.
D)The right of Byron to fire Tyler after the merger.
E)The right of Alec to sue the surviving corporation for damages.

Question 54

In the attempt of Grow True Corporation to gain control,which of the following terms describes Grassroots Corporation?

A)Vulnerable corporation
B)Target corporation
C)Accessible corporation
D)Hostile corporation
E)Weak corporation

Question 55

Which of the following must a corporation do first when initiating voluntary dissolution procedures?

A)The directors must resign.
B)The officers must resign.
C)The court must appoint a receiver.
D)The directors must file articles of dissolution with the secretary of state.
E)The directors must notify the local court with jurisdiction over any claims.

Question 56

Which of the following is false regarding involuntary liquidation?

A)The secretary of state can compel involuntary dissolution if the corporation failed to pay taxes within 60 days of the due date.
B)The state may initiate dissolution procedures.
C)The secretary of state can compel involuntary dissolution if the corporation did not have a registered agent or office in the state for 60 days or more.
D)The secretary of state can compel involuntary dissolution of the corporation if the corporation's duration as specified in its articles of incorporation has expired.
E)Individual shareholders may not petition the state to order dissolution.

Question 57

[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"?

A)Merger
B)Consolidation
C)Restructuring
D)Reforming
E)Asset purchase

Question 58

Ana is the president of PJL Corporation.In November,her assistant Damon tells her that B2B Corporation is planning a tender offer and that it has presented an offer to shareholders.Ana tells him that they should keep information regarding PJL Corporation as quiet as possible until the end of the year because she does not want shareholders to find out any negative information regarding PJL Corporation's poor performance in the last few months.Which of the following is true regarding Ana's plan?

A)It is a bad plan because Ana must at least inform the shareholders that she is withholding information until the end of the year.
B)It is a good plan only if an S Corporation is involved;otherwise,Ana has a duty to reveal all pertinent facts to shareholders.
C)It is a good plan only if the corporation is new,meaning that it has been incorporated under one year;otherwise,Ana has a duty to reveal all pertinent facts to shareholders.
D)It is a good plan only if a close corporation is involved;otherwise,Ana has a duty to reveal all pertinent facts to shareholders.
E)It is a bad plan because once an aggressor has presented its offer to the target corporation's shareholders,the target corporation's board of directors must inform shareholders of all facts pertinent to voting.

Question 59

In a merger,which of the following is true regarding the property of the absorbed corporation?

A)It must be held in trust for at least six months to satisfy claims of creditors.
B)It must be placed within the jurisdiction of the secretary of state for at least one year in order to satisfy claims of creditors.
C)It must be sold and distributed to the absorbed corporation's shareholders.
D)It is obtained by the surviving corporation.
E)It must be held in trust for at least one year to satisfy claims of creditors.

Question 60

Death of a corporation occurs in which of the following phases?

A)Notification and liquidation
B)Dissolution and trial
C)Dissolution and proceedings
D)Reforming and liquidation
E)Dissolution and liquidation

Question 61

What is the difference between the procedures governing mergers and consolidations?

A)With consolidation,the plan need not be submitted to the secretary of state.
B)Unlike consolidation,with merger,the shareholders must approve the plan before it goes to the board of directors.
C)With consolidation,only the board of directors of both involved corporations must approve the plan;with merger,the shareholders of both involved corporations must also approve the plan.
D)The procedures governing mergers and consolidations are the same.
E)Unlike merger,with consolidation,no approval certificate is necessary.

Question 62

[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?

A)As dissenting shareholders,they cannot overrule the majority's vote.
B)They can exercise their appraisal rights and receive monetary compensation from the corporation for their value.
C)Because 90% of the shareholders voted in favor of the merger,there are no other steps Calvin and Daniella can take.
D)They have no options because the law does not protect shareholders from one another.
E)They have no options because 90% of the shareholders voted in favor of the merger,thus,they cannot exercise their appraisal rights.

Question 63

Which of the following should occur in the face of the board not wishing to be involved in liquidation proceedings?

A)The court should enter an injunction requiring that at least half of the directors proceed with liquidation regardless of whether they want to do so.
B)A court should appoint a bankruptcy trustee to handle liquidation.
C)The court should enter an injunction requiring all the directors to proceed with liquidation regardless of whether they want to do so.
D)A court should appoint a receiver not affiliated with the corporation to take over liquidation duties.
E)Janelle,as president,is required to take over liquidation duties.

Question 64

Which of the following is true about acquisitions of domestic and foreign corporations?

A)Acquisitions between domestic corporations and acquisitions between foreign corporations are governed by the same law.
B)Acquisitions between domestic corporations and acquisitions between foreign corporations are governed by federal law.
C)Though there are some minor differences in procedure,acquisitions between domestic corporations are very similar acquisitions between corporations from different states. ,
D)Acquisitions between domestic corporations are very different from acquisitions between corporations from different states.
E)Federal statutes govern all mergers and consolidations.

Question 65

Is Cyril correct that BigCheese needs shareholder approval for the deal with Cheeseland?

A)Yes,because it is a hostile takeover.
B)Yes,acquiring corporations always need the approval of the shareholders.
C)No,acquiring corporations never need the approval of the shareholders.
D)Yes,but only if Cyril owns at least 20% of BigCheese's stock.
E)No,unless the asset purchase changes the legal status of BigCheese.

Question 66

Assuming Calvin and Daniella properly exercise their appraisal rights,how is the value of their shares generally determined?

A)By the value of the shares on the day the merger is finalized.
B)By the value of the shares on the day of the shareholder vote.
C)By the value of the shares of similarly sized corporations.
D)By the value of the shares on the day before the shareholder vote.
E)By the value of the shares on the day following the shareholder vote.

Question 67

Which of the following is true regarding Tony's suggestion that dissolution be implemented quickly in order to avoid claims by creditors?

A)Whether or not his suggestion will help depends on the corporation's articles of incorporation which set forth the time period during which creditors may file claims following dissolution.
B)His suggestion was a good one only for debts outstanding for over 1 year;otherwise,the creditors have at least six months following dissolution in which to make claims.
C)His suggestion was a good one because in that way,the claims could likely be avoided.
D)His suggestion would not avoid claims because the law requires that creditors be allowed at least 120 days after dissolution in order to make a claim.
E)Whether or not his suggestion will help depends on the corporation's bylaws which set forth the time period during which creditors may file claims following dissolution.

Question 68

When dissenting shareholders do not properly invoke their appraisal rights,will they be forced to comply with the majority of the corporations' shareholders?

A)Yes,in such a situation,dissenting shareholders must comply with the decision of the majority of the corporations' shareholders.
B)No,dissenting shareholders need not comply as long as they adequately communicate their appraisal rights.
C)No,dissenting shareholders need not comply because the procedures governing appraisal rights need not be strictly followed.
D)No,dissenting shareholders are never forced to comply with the decision of the majority of the corporations' shareholders.
E)Yes,although the dissenting shareholders cannot exercise their appraisal rights if not properly invoked,a court will not force them to comply with the decision of the majority of the corporations' shareholders

Question 69

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

A)Depending on the jurisdiction,dissenting shareholders may be stripped of their rights,including the right to vote.
B)Dissenting shareholders need only express their dissent,the procedures do not need to be strictly followed.
C)Shareholders who lose their legal status also lose their right to sue.
D)The procedures governing appraisal rights are minimal.
E)The legal status of dissenting shareholders never changes.

Question 70

Is Jude correct that the proxies do not really matter?

A)Yes,only shareholders have a right to vote at shareholder meetings.
B)Yes,the proxies do not have a right to vote at shareholder meetings.
C)Yes,proxies have no rights under the law.
D)No,although only shareholders have a right to vote at shareholder meetings,the proxies can influence the shareholders.
E)No,the holder of a proxy has the right to vote at shareholder meetings.

Question 71

Is Cyril correct that BigCheese will be responsible for Cheeseland's liabilities?

A)Yes,unless the contract between BigCheese and Cheeseland states otherwise.
B)Yes,like a merger or consolidation,corporations that purchase the assets of another corporation generally acquire its liabilities.
C)Yes,because asset purchases are treated like a merger.
D)No,the liabilities of one corporation do not transfer to the other unless there is an express agreement otherwise.
E)No,corporations that purchase the assets of another corporation generally do not acquire its liabilities.

Question 72

Assuming Calvin and Daniella can exercise their appraisal rights in this situation,what must they do?

A)They must issue a statement demanding adequate compensation for their shares.
B)They must file a notice with the Secretary of State objecting to the merger and demanding fair market value for their shares.
C)They must issue a statement demanding the vote be re-cast.
D)They must issue a statement demanding the merger be declared null and void.
E)They must file a demand with a court for fair market value for their shares.

Question 73

Which of the following is true of Janelle's plan to continue with disbanding the corporation over Ahmed's objection?

A)She could proceed with her plan.
B)It is unknown if she could proceed with her plan because Ahmed's agreement was essential if he owned more than 10% of the company's shares.
C)She could not continue with her plan because unanimous approval of shareholders was required.
D)It is unknown if she could proceed with her plan because Ahmed's agreement was essential if he owned more than 30% of the company's shares.
E)It is unknown if she could proceed with her plan because Ahmed's agreement was essential if he owned more than 20% of the company's shares.

Question 74

Is InfoHub likely to refuse to provide the shareholder list?

A)Probably not.Most companies provide them voluntarily because federal law requires target corporations to assist aggressors in some ways.
B)Yes,corporations always refuse to provide shareholder lists because of the threat of takeovers.
C)Probably not,since companies are required to provide them.
D)Yes,although federal law requires target corporations to assist aggressors in some ways,aggressors are prohibited from access to shareholder lists.
E)Yes,federal securities law protects target corporations from aggressors.

Question 75

If Calvin and Daniella cannot reach an agreement with the corporation,how is the value of their shares determined?

A)By vote of the Board of Directors of GamePower.
B)By vote of the shareholders of GamePower.
C)The Secretary of State of the state where GamePower is incorporated will intervene to determine the shares' value.
D)A court may intervene to establish the shares' value.
E)The FCC is required to establish the shares' value.

Question 76

Is Myron correct that the vote by Cheeseland's Board of Directors is legitimate to finalize the deal between the two companies?

A)No,Cheeseland only needs the approval of its shareholders before it can sell its assets.
B)No,Cheeseland needs the approval of both its board of directors and its shareholders before it can sell its assets.
C)No,Cheeseland needs the approval of its shareholders for a merger
D)Yes,Cheeseland only needs the approval of its board of directors before it can sell its assets.
E)Yes,Cheeseland only needs the approval of its board of directors for a merger.

Question 77

Stacia,a shareholder in ZipCorp,learns that ZipCorp's Board of Directors have voted for ZipCorp to merge with ZenCorp.Stacia objects to the merger because the shareholders did not vote to approve the merger.Under which of the following scenarios would a shareholder,like Stacia,not have a right to vote for a merger?

A)If ZenCorp owns at least 90% of the outstanding shares of ZipCorp stock.
B)If the FCC approved ZenCorp's plan.
C)If ZenCorp owned at least three-fifths of ZipCorp's stock.
D)If ZenCorp were a foreign corporation.
E)If ZipCorp were a foreign corporation.

Question 78

Which of the following is true regarding state approval of mergers?

A)After reviewing the plan to see that legal requirements are met,the secretary of state issues a certificate to grant approval.
B)The secretary of state must approve mergers so long as creditors of the corporate entity at issue do not remain unpaid.
C)The secretary of state must approve mergers so long as no more than 10% of either company's shareholders object.
D)The secretary of state must approve mergers so long as corporate entity at issue has sufficient assets.
E)There is no requirement that the state approve mergers.

Question 79

[Cheeseland Purchase] Cheeseland,Inc. ,manufactures processed cheese products.BigCheese,Inc. ,seeks to purchase Cheeseland's well-known trademarks and logos,and its factory and equipment.The Board of Directors of both companies vote in favor of the deal.Alba is a 15% shareholder of Cheeseland.Her grandfather started the business many years ago and she does not want the company to sell off its endearing trademark and the factory her grandfather built.She visits Myron,an attorney,and Myron tells her that the Board's vote is legitimate to finalize the deal with BigCheese and the best she can do is take the money.Cyril is a shareholder in BigCheese,and his grandfather was cheated fifty years ago by Alba's grandfather and he doesn't want BigCheese to be responsible for Cheeseland's enormous liabilities.Cyril threatens to take BigCheese to court because he claims shareholder approval is required to purchase Cheeseland.
What type of transaction is the deal contemplated by BigCheese and Cheeseland?

A)Consolidation.
B)Merger.
C)Purchase of stock.
D)Purchase of assets.
E)Hostile Takeover.

Question 80

[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.
What type of takeover is contemplated in this situation?

A)Takeover acquisition.
B)Exchange tender offer.
C)Beachhead offer
D)Cash tender offer.
E)Beachhead acquisition.