Question 1

Like other corporations, Market Maker Inc. can expand its operations by

Accepted Answer

A)  combining with another corporation. 
B)  terminating its existence. 
C)  purchasing a substantial number of its voting shares. 
D)  dissolving and winding up.

Question 2

When a corporation is dissolved voluntarily, its assets can be liquidated without notice to its creditors.

Accepted Answer

A) True 
 B)False

Question 3

A court can dissolve a corporation for abuse of corporate powers.

Accepted Answer

A) True 
 B)False

Question 4

Fact Pattern 31-7 Enchilada Inc. seeks to purchase a substantial number of the voting shares of Fajita Inc .
Refer to Fact Pattern 31-7. The directors of Fajita resist Enchilada's takeover attempt. In analyzing whether this is reasonable, a court would apply

Accepted Answer

A)  an appraisal right. 
B)  a takeover defense. 
C)  the corporation's policies. 
D)  the business judgment rule.

Question 5

Appraisal rights cannot be lost even if the statutory procedures are not followed precisely.

Accepted Answer

A) True 
 B)False

Question 6

Through a tender offer, an acquiring corporation deals directly with a target company's management in seeking to purchase the target's stock.

Accepted Answer

A) True 
 B)False

Question 7

Fact Pattern 31-6 Sweet Inc. acquires all of the assets of Tart Inc . by direct purchase.
Refer to Fact Pattern 31-6. Upton is a Tart shareholder who does not approve of the deal. In most states, Upton can

Accepted Answer

A)  reverse the deal so that Tart acquires all of the assets of Sweet. 
B)  insist that the companies carry out their corporate purposes. 
C)  demand appraisal rights. 
D)  require the parties to cancel the deal.

Question 8

Corporate creditors are required to approve a plan of merger or consolidation.

Accepted Answer

A) True 
 B)False

Question 9

The shareholder's appraisal right does not normally apply to sales of substantially all of the corporate assets.

Accepted Answer

A) True 
 B)False

Question 10

Fact Pattern 31-1 Outlook Inc. merges with Pinnacle Inc. Only Pinnacle remains.
Refer to Fact Pattern 31-1. Outlook held rights in certain real property. With regard to these assets, in the merger Pinnacle assumes

Accepted Answer

A)  none of Outlook ' s assets. 
B)  only those assets acquired after the merger was proposed. 
C)  an amount of assets equal to the ratio of the firms' pre-merger market values. 
D)  all of Outlook ' s assets .

Question 11

To resist a takeover, a target company may make a self-tender.

Accepted Answer

A) True 
 B)False

Question 12

Fact Pattern 31-2 Dynamo Corporation combines its assets and liabilities with those of Energy Company to form Fuel Inc. Dynamo and Energy cease to exist.
Refer to Fact Pattern 31-2. With respect to the liabilities of Dynamo and Energy, Fuel Inc. acquires

Accepted Answer

A)  none of the liabilities. 
B)  only those liabilities acquired after the combination was proposed. 
C)  an amount of liability equal to the ratio of the firms' pre-merger market values. 
D)  all the liabilities of both companies.

Question 13

All states have statutes authorizing share exchanges for domestic corporations.

Accepted Answer

A) True 
 B)False

Question 14

Before a vote is taken on a proposed combination, the shareholders must be given the same information the directors used when deciding to pursue the combination.

Accepted Answer

A) True 
 B)False

Question 15

A court cannot dissolve a corporation for failure to commence business operations.

Accepted Answer

A) True 
 B)False

Question 16

A short-form merger can be accomplished only with the approval of the shareholders.

Accepted Answer

A) True 
 B)False

Question 17

Generally, a corporation that is selling all of its assets must obtain the approval of the shareholders.

Accepted Answer

A) True 
 B)False

Question 18

Through a certain transaction, Coffee Café Inc. acquires all of the shares of Deli Corporation for some of Coffee's shares. Both Coffee and Deli continue to exist. This is

Accepted Answer

A)  a consolidation. 
B)  a share exchange. 
C)  a short-form merger. 
D)  a purchase of assets.

Question 19

Like other corporations, Social Media Inc. can expand its operations by

Accepted Answer

A)  liquidating its assets. 
B)  purchasing the assets of another corporation. 
C)  firing employees. 
D)  distributing retained earnings to shareholders.

Question 20

Fact Pattern 31-1 Outlook Inc. merges with Pinnacle Inc. Only Pinnacle remains.
Refer to Fact Pattern 31-1. Outlook owed money to Quest Bank and other creditors. With respect to these liabilities, in the merger Pinnacle assumes

Accepted Answer

A)  none of Outlook ' s liabilities. 
B)  only those liabilities incurred after the merger was proposed. 
C)  an amount of liability equal to the ratio of the firms' pre-merger market values. 
D)  all of Outlook ' s liabilities.

Exam 31: Combining and Dissolving a Corporation

Like other corporations, Market Maker Inc. can expand its operations by

When a corporation is dissolved voluntarily, its assets can be liquidated without notice to its creditors.

A court can dissolve a corporation for abuse of corporate powers.

Fact Pattern 31-7 Enchilada Inc. seeks to purchase a substantial number of the voting shares of Fajita Inc . Refer to Fact Pattern 31-7. The directors of Fajita resist Enchilada's takeover attempt. In analyzing whether this is reasonable, a court would apply

Appraisal rights cannot be lost even if the statutory procedures are not followed precisely.

Through a tender offer, an acquiring corporation deals directly with a target company's management in seeking to purchase the target's stock.

Fact Pattern 31-6 Sweet Inc. acquires all of the assets of Tart Inc . by direct purchase. Refer to Fact Pattern 31-6. Upton is a Tart shareholder who does not approve of the deal. In most states, Upton can

Corporate creditors are required to approve a plan of merger or consolidation.

The shareholder's appraisal right does not normally apply to sales of substantially all of the corporate assets.

Fact Pattern 31-1 Outlook Inc. merges with Pinnacle Inc. Only Pinnacle remains. Refer to Fact Pattern 31-1. Outlook held rights in certain real property. With regard to these assets, in the merger Pinnacle assumes

To resist a takeover, a target company may make a self-tender.

Fact Pattern 31-2 Dynamo Corporation combines its assets and liabilities with those of Energy Company to form Fuel Inc. Dynamo and Energy cease to exist. Refer to Fact Pattern 31-2. With respect to the liabilities of Dynamo and Energy, Fuel Inc. acquires

All states have statutes authorizing share exchanges for domestic corporations.

Before a vote is taken on a proposed combination, the shareholders must be given the same information the directors used when deciding to pursue the combination.

A court cannot dissolve a corporation for failure to commence business operations.

A short-form merger can be accomplished only with the approval of the shareholders.

Generally, a corporation that is selling all of its assets must obtain the approval of the shareholders.

Through a certain transaction, Coffee Café Inc. acquires all of the shares of Deli Corporation for some of Coffee's shares. Both Coffee and Deli continue to exist. This is

Like other corporations, Social Media Inc. can expand its operations by

Fact Pattern 31-1 Outlook Inc. merges with Pinnacle Inc. Only Pinnacle remains. Refer to Fact Pattern 31-1. Outlook owed money to Quest Bank and other creditors. With respect to these liabilities, in the merger Pinnacle assumes