Exam 36: Fundamental Changes of Corporations

a. In general, what is considered a fundamental change in a corporation? Give three examples of what would be considered a fundamental change. b. Who proposes such fundamental changes? Who must approve them? Explain. c. Brian is a minority shareholder in Gryath, Inc. He opposes a fundamental change that is approved and implemented. What rights does he have?

Statutory provisions do not protect creditors upon the dissolution of a corporation.

The 2002 amendments to the Revised Act provide for domestication and conversion into other entities without a merger.

A compulsory share exchange requires approval from the board of directors of each corporation, but not shareholders of either 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.

The Revised Act permits the board of directors to adopt certain amendments without shareholder action, unless the articles of incorporation provide otherwise. These amendments would include:

Jasmine owns a controlling interest in the Hardwick Company. Explain her responsibilities if she wants to privately sell her interest.

The use of cash-out combinations has raised questions concerning both their purpose and their fairness to minority shareholders. In this context, fairness includes:

Any method of combination of corporations that involves shares, proxy solicitations, or tender offers may be subject to federal securities regulation.

A dissolution may be judicially decreed if a proceeding is brought by the state, a shareholder, or a creditor.

The case of Alpert v. 28 Williams St.Corp. involves a compulsory share exchange.

Larson & Son manufactured welders that frequently malfunctioned, setting clothing on fire and causing serious burns. Larson & Son sold all of its assets to Swenson Co., which continued to manufacture the Larson welder product line. Eleven months after Swenson's purchase, one of Larson's customers sued Swenson for injuries caused by a welder purchased from Larson, six months prior to the purchase by Swenson. Under the circumstances, Swenson Co.:

The 1999 amendments to the Revised MBCA did not change the voting rule; fundamental changes still need be approved by a majority of the votes entitled to be cast.

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?

A court may not dissolve a corporation in a proceeding brought by a shareholder if it is only established that the acts of the directors are merely oppressive and not destructive.

A corporation that buys the assets of another corporation does not assume the other's liability unless:

Shareholder approval of a fundamental change means a unanimous vote.

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