Question 1

The Williams Act provides for both civil and criminal penalties for violation.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following best describes a merger?

Accepted Answer

A)  two corporations jointly purchase a third corporation and operate it as a joint venture 
B)  two corporations are combined to form a new third corporation, and the original two corporations cease to exist 
C)  two corporations are combined, with one of the original corporations surviving, and the other ceasing to exist 
D)  one corporation acquires all of the shares of a second corporation, with both corporations retaining their separate legal existence, the second a subsidiary of the first 
E)  one corporation sells substantially all of its assets to a second corporation, with both corporations retaining their separate legal existence 
A)  two corporations jointly purchase a third corporation and operate it as a joint venture 
B)  two corporations are combined to form a new third corporation, and the original two corporations cease to exist 
C)  two corporations are combined, with one of the original corporations surviving, and the other ceasing to exist 
D)  one corporation acquires all of the shares of a second corporation, with both corporations retaining their separate legal existence, the second a subsidiary of the first 
E)  one corporation sells substantially all of its assets to a second corporation, with both corporations retaining their separate legal existence

Question 3

The dissenting shareholder appraisal right allows a shareholder to request appraisal of the shares to be acquired in a merger,and the tender offer price will be adjusted based on the appraisal.

Accepted Answer

A) True 
 B)False

Question 4

A successful tender offer between two corporations cannot be followed by a merger of the two corporations.

Accepted Answer

A) True 
 B)False

Question 5

Ordinarily,a merger requires the approval of both boards of directors and the shareholders of both corporations.

Accepted Answer

A) True 
 B)False

Question 6

A proxy always grants the holder of the proxy the right to vote as the holder of the proxy desires.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not a possible consequence of including fraudulent information in a proxy solicitation?

Accepted Answer

A)  a criminal action initiated by the justice department 
B)  fines imposed on shareholders who granted proxies 
C)  a civil action by the Securities and Exchange Commission 
D)  an order requiring a new election on the matter for which proxies were sought 
E)  a suit by an injured shareholder for damages from the wrongdoer 
A)  a criminal action initiated by the justice department 
B)  fines imposed on shareholders who granted proxies 
C)  a civil action by the Securities and Exchange Commission 
D)  an order requiring a new election on the matter for which proxies were sought 
E)  a suit by an injured shareholder for damages from the wrongdoer

Question 8

Any state regulation of hostile takeovers is unconstitutional under the commerce clause of the United States Constitution.

Accepted Answer

A) True 
 B)False

Question 9

According to the Williams Act,the tender offer cannot be closed before twenty (20)business days after the commencement of the tender offer.

Accepted Answer

A) True 
 B)False

Question 10

If the board of directors of a target corporation does not agree to a merger or an acquisition,the acquiring corporation can make a tender offer for the shares directly to the shareholders of the target corporation.

Accepted Answer

A) True 
 B)False

Question 11

The proxy holder is often a director or an officer of the corporation.

Accepted Answer

A) True 
 B)False

Question 12

A proxy statement must include information about what?

Accepted Answer

A)  who is soliciting the proxy, and the matter for which the proxy is being solicited 
B)  who is soliciting the proxy, and the estimated likelihood that the matter will be approved 
C)  who is soliciting the proxy, and the number of proxies already executed on the matter 
D)  who is soliciting the proxy, and pro forma financial statements, assuming that the matter for which the proxy is sought is approved 
E)  the matter for which the proxy is being solicited, and the estimated likelihood that the matter will be approved 
A)  who is soliciting the proxy, and the matter for which the proxy is being solicited 
B)  who is soliciting the proxy, and the estimated likelihood that the matter will be approved 
C)  who is soliciting the proxy, and the number of proxies already executed on the matter 
D)  who is soliciting the proxy, and pro forma financial statements, assuming that the matter for which the proxy is sought is approved 
E)  the matter for which the proxy is being solicited, and the estimated likelihood that the matter will be approved

Question 13

State antitakeover statutes apply to corporations that are incorporated in the state.

Accepted Answer

A) True 
 B)False

Question 14

Over one-half of the largest corporations in the United States have their articles of incorporation filed in the state of ________.

Accepted Answer

A)  Rhode Island 
B)  Delaware 
C)  Nevada 
D)  California 
E)  New York 
A)  Rhode Island 
B)  Delaware 
C)  Nevada 
D)  California 
E)  New York

Question 15

Which of the following best describes a proxy contest?

Accepted Answer

A)  Opposing factions of shareholders seek different prices for their shares. 
B)  Opposing factions of shareholders seek proxies, so they can vote other shareholders' shares on a matter. 
C)  Members of the board of directors seek the support of other board members on a matter to be voted on by the board. 
D)  Opposing factions of shareholders seek to influence board members to vote in a certain way on a matter before the board of directors. 
E)  Opposing factions of shareholders seek to influence officers to disregard the board of directors. 
A)  Opposing factions of shareholders seek different prices for their shares. 
B)  Opposing factions of shareholders seek proxies, so they can vote other shareholders' shares on a matter. 
C)  Members of the board of directors seek the support of other board members on a matter to be voted on by the board. 
D)  Opposing factions of shareholders seek to influence board members to vote in a certain way on a matter before the board of directors. 
E)  Opposing factions of shareholders seek to influence officers to disregard the board of directors.

Question 16

A transaction in which two corporations combine,such that afterwards only one of them still exists and owns all the assets previously owned by either corporation,is called a:

Accepted Answer

A)  merger. 
B)  consolidation. 
C)  purchase of assets. 
D)  share exchange. 
E)  buyout. 
A)  merger. 
B)  consolidation. 
C)  purchase of assets. 
D)  share exchange. 
E)  buyout.

Question 17

A short-form merger procedure is simpler than an ordinary merger.

Accepted Answer

A) True 
 B)False

Question 18

Marvin owns several thousand shares of Goodguy Corporation.Bigandbad Corporation has proposed a merger with Goodguy where Bigandbad will be the surviving corporation.Bigandbad is proposing to give each current Goodguy shareholder some Bigandbad stock and some cash for each share of Goodguy.Marvin is opposed to some of the corporate policies of Bigandbad,and does not want to own any of its stock.What is Marvin's best course of action in this situation?

Accepted Answer

A)  Marvin can hope to obtain the support of other shareholders in opposing the merger, but he must go along with the merger if it is approved. 
B)  Marvin can hope to convince the board of directors of Goodguy to oppose the merger, but if he is unsuccessful, he must go along with the merger. 
C)  Marvin can invoke his appraisal right, and would be entitled to receive cash for his shares, even though the merger plan includes the receipt of Bigandbad shares. 
D)  Marvin can invoke his appraisal right, but because part of the price paid for the Goodguy shares is in the form of stock rather than cash, his appraisal right is limited. 
E)  Marvin can invoke his appraisal right, but he can only increase the number of shares he receives, and cannot receive any cash. 
A)  Marvin can hope to obtain the support of other shareholders in opposing the merger, but he must go along with the merger if it is approved. 
B)  Marvin can hope to convince the board of directors of Goodguy to oppose the merger, but if he is unsuccessful, he must go along with the merger. 
C)  Marvin can invoke his appraisal right, and would be entitled to receive cash for his shares, even though the merger plan includes the receipt of Bigandbad shares. 
D)  Marvin can invoke his appraisal right, but because part of the price paid for the Goodguy shares is in the form of stock rather than cash, his appraisal right is limited. 
E)  Marvin can invoke his appraisal right, but he can only increase the number of shares he receives, and cannot receive any cash.

Question 19

Under what circumstances can management recover from the corporation the costs it incurs in a proxy contest?

Accepted Answer

A)  under all circumstances 
B)  in all proxy contests management wins 
C)  in a proxy contest involving an issue of policy, even if management does not win the proxy contest 
D)  in all proxy contests involving issues of policy, and in the case of contests concerning personal matters, if management wins 
E)  in all proxy contests involving issues of policy that management wins, but never for contests involving personal issues 
A)  under all circumstances 
B)  in all proxy contests management wins 
C)  in a proxy contest involving an issue of policy, even if management does not win the proxy contest 
D)  in all proxy contests involving issues of policy, and in the case of contests concerning personal matters, if management wins 
E)  in all proxy contests involving issues of policy that management wins, but never for contests involving personal issues

Question 20

The United States Treasury Department administers and enforces laws pertaining to proxies and proxy contests.

Accepted Answer

A) True 
 B)False

Exam 29: Corporate Acquisitions and Multinational Corporations

The Williams Act provides for both civil and criminal penalties for violation.

Which of the following best describes a merger?

The dissenting shareholder appraisal right allows a shareholder to request appraisal of the shares to be acquired in a merger,and the tender offer price will be adjusted based on the appraisal.

A successful tender offer between two corporations cannot be followed by a merger of the two corporations.

Ordinarily,a merger requires the approval of both boards of directors and the shareholders of both corporations.

A proxy always grants the holder of the proxy the right to vote as the holder of the proxy desires.

Which of the following is not a possible consequence of including fraudulent information in a proxy solicitation?

Any state regulation of hostile takeovers is unconstitutional under the commerce clause of the United States Constitution.

According to the Williams Act,the tender offer cannot be closed before twenty (20)business days after the commencement of the tender offer.

If the board of directors of a target corporation does not agree to a merger or an acquisition,the acquiring corporation can make a tender offer for the shares directly to the shareholders of the target corporation.

The proxy holder is often a director or an officer of the corporation.

A proxy statement must include information about what?

State antitakeover statutes apply to corporations that are incorporated in the state.

Over one-half of the largest corporations in the United States have their articles of incorporation filed in the state of ________.

Which of the following best describes a proxy contest?

A transaction in which two corporations combine,such that afterwards only one of them still exists and owns all the assets previously owned by either corporation,is called a:

A short-form merger procedure is simpler than an ordinary merger.

Under what circumstances can management recover from the corporation the costs it incurs in a proxy contest?

The United States Treasury Department administers and enforces laws pertaining to proxies and proxy contests.

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