Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

A mortgage or pledge of any or all of a corporation's property and assets-whether in the usual or regular course of business or not- requires the approval of the board of directors and the shareholders.

Accepted Answer

A) True 
 B)False

Question 3

The management of Absco Corporation forms Basco Corporation. Basco  Corporation issues bonds to institutional investors to raise cash, with which it purchases the assets or stock of Absco  Corporation. The assets of Absco  Corporation are used as security for the bonds issued by Basco  Corporation. 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 4

After dissolution, the corporation must cease carrying on its business except as is necessary to wind up.

Accepted Answer

A) True 
 B)False

Question 5

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 6

A corporation may accomplish acquiring all or substantially all assets of another corporation by:

Accepted Answer

A)  purchase or lease of other corporations' assets. 
B)  purchase of a controlling stock interest in other corporations. 
C)  merger or consolidation with other corporations. 
D)  Any of these are ways that corporations may acquire assets of another corporation. 
A)  purchase or lease of other corporations' assets. 
B)  purchase of a controlling stock interest in other corporations. 
C)  merger or consolidation with other corporations. 
D)  Any of these are ways that corporations may acquire assets of another corporation.

Question 7

Shareholders do not have vested property rights resulting from provisions in the articles of incorporation.

Accepted Answer

A) True 
 B)False

Question 8

The __________ gives shareholders who elect such a right in the articles of incorporation the power to dissolve the corporation.

Accepted Answer

A)  appraisal remedy 
B)  U.C.C. 
C)  Statutory Close Corporation Supplement 
D)  common law 
A)  appraisal remedy 
B)  U.C.C. 
C)  Statutory Close Corporation Supplement 
D)  common law

Question 9

Under the Dodd-Frank Act signed into law in 2010, proxy solicitations asking shareholders to approve an acquisition, merger, or consolidation in publicly held companies must provide shareholders with a binding vote to approve any compensation relating to these combinations.

Accepted Answer

A) True 
 B)False

Question 10

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.

Question 11

The secretary of state may bring an action for involuntary dissolution of a company if the corporation has not paid its annual franchise tax.

Accepted Answer

A) True 
 B)False

Question 12

The board approves a proposed amendment to deny existing preemptive rights to Class A preferred, and to issue stock in a new Class D preferred that would be accorded liquidation preference after all other classes of preferred stock. Preferred Classes B and C would remain the same. Which of the following would be true?

Accepted Answer

A)  Only Class B and C shareholders vote. 
B)  A majority of Class A, B, and C shareholders all together would be needed to pass the amendment. 
C)  Class B and C shareholders would not be entitled to vote at all. 
D)  Class A and C shareholders would vote together. 
A)  Only Class B and C shareholders vote. 
B)  A majority of Class A, B, and C shareholders all together would be needed to pass the amendment. 
C)  Class B and C shareholders would not be entitled to vote at all. 
D)  Class A and C shareholders would vote together.

Question 13

In order to lease substantially all of a corporation's assets not in the usual course of business:

Accepted Answer

A)  shareholder approval is necessary. 
B)  shareholder approval is required if so determined by a subjective test under the 1999 amendments to the Revised Act. 
C)  approval of the board and the majority of the corporation's outstanding shares is required; dissenting shareholders do not usually have an appraisal remedy. 
D)  shareholder approval is unnecessary, unlike for the sale of assets. 
A)  shareholder approval is necessary. 
B)  shareholder approval is required if so determined by a subjective test under the 1999 amendments to the Revised Act. 
C)  approval of the board and the majority of the corporation's outstanding shares is required; dissenting shareholders do not usually have an appraisal remedy. 
D)  shareholder approval is unnecessary, unlike for the sale of assets.

Question 14

The Revised Act grants dissenters' rights:

Accepted Answer

A)  to dissenting shareholders of a corporation leasing substantially all its assets, not in the usual course of business. 
B)  only to the last capitalized corporation in a merger. 
C)  when a plan of compulsory share exchange is being acted on, for the acquiring corporation only. 
D)  All of these are dissenter's rights. 
A)  to dissenting shareholders of a corporation leasing substantially all its assets, not in the usual course of business. 
B)  only to the last capitalized corporation in a merger. 
C)  when a plan of compulsory share exchange is being acted on, for the acquiring corporation only. 
D)  All of these are dissenter's rights.

Question 15

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 16

The Revised Model Act would permit the directors to avoid a shareholder vote for which of the following amendments to the articles of incorporation?

Accepted Answer

A)  Changing the name from The Oscar Company to McDuddy Corporation. 
B)  A change from duration of 99 years to perpetual life. 
C)  Authorizing a new class of stock. 
D)  Adding to the number of directors. 
A)  Changing the name from The Oscar Company to McDuddy Corporation. 
B)  A change from duration of 99 years to perpetual life. 
C)  Authorizing a new class of stock. 
D)  Adding to the number of directors.

Question 17

Incorporation statutes usually provide only for involuntary dissolution of a corporation.

Accepted Answer

A) True 
 B)False

Question 18

A creditor may petition the court to judicially dissolve a corporation if he has an unsatisfied judgment against the corporation and:

Accepted Answer

A)  the corporation is insolvent. 
B)  the creditor will become insolvent if not paid. 
C)  the debt is over $5,000. 
D)  the debt is more than 120 days overdue. 
A)  the corporation is insolvent. 
B)  the creditor will become insolvent if not paid. 
C)  the debt is over $5,000. 
D)  the debt is more than 120 days overdue.

Question 19

Discuss what happens to a corporation after dissolution and what protection is afforded creditors of the corporation.

Accepted Answer

Dissolution requires that the corporatio

Question 20

The statutory provisions governing dissolution and liquidation usually prescribe procedures to safeguard the interests of the corporation's creditors. These procedures include:

Accepted Answer

A)  the required mailing of notice to known creditors. 
B)  a general publication of notice. 
C)  the preservation of claims against the corporation. 
D)  All of these. 
A)  the required mailing of notice to known creditors. 
B)  a general publication of notice. 
C)  the preservation of claims against the corporation. 
D)  All of these.

Exam 36: Fundamental Changes of Corporations

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

A mortgage or pledge of any or all of a corporation's property and assets-whether in the usual or regular course of business or not- requires the approval of the board of directors and the shareholders.

After dissolution, the corporation must cease carrying on its business except as is necessary to wind up.

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

A corporation may accomplish acquiring all or substantially all assets of another corporation by:

Shareholders do not have vested property rights resulting from provisions in the articles of incorporation.

The __________ gives shareholders who elect such a right in the articles of incorporation the power to dissolve the corporation.

Under the Dodd-Frank Act signed into law in 2010, proxy solicitations asking shareholders to approve an acquisition, merger, or consolidation in publicly held companies must provide shareholders with a binding vote to approve any compensation relating to these combinations.

A consolidation:

The secretary of state may bring an action for involuntary dissolution of a company if the corporation has not paid its annual franchise tax.

In order to lease substantially all of a corporation's assets not in the usual course of business:

The Revised Act grants dissenters' rights:

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

The Revised Model Act would permit the directors to avoid a shareholder vote for which of the following amendments to the articles of incorporation?

Incorporation statutes usually provide only for involuntary dissolution of a corporation.

A creditor may petition the court to judicially dissolve a corporation if he has an unsatisfied judgment against the corporation and:

Discuss what happens to a corporation after dissolution and what protection is afforded creditors of the corporation.

The statutory provisions governing dissolution and liquidation usually prescribe procedures to safeguard the interests of the corporation's creditors. These procedures include:

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

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International Business Law

Introduction to Property Property Insurance Bailments and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

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