Question 1

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

Accepted Answer

A) True 
 B)False  True

Question 2

Match each statement with the correct term below.
-tender offer

Accepted Answer

A) Directors are elected by a plurality of votes. 
B) Authorization to vote another's shares at a shareholder meeting. 
C) Permits a domestic business corporation to become a domestic or foreign partnership, LLC, or other entity; permits a domestic of foreign partnership, LLC, or other entity to become a domestic business corporation. 
D) Change of a corporation's state of incorporation. 
E) Entitles each shareholder to give one candidate as many votes as the number of directors to be elected multiplied by the number of shares owned.
F)Minimum number necessary to be present at a meeting in order to transact business.
G)Brought by shareholder on behalf of the corporation to enforce a right belonging to the corporation.
H)Brought by a shareholder to enforce a claim against the corporation based upon his ownership of shares.
I)Must exercise ordinary care and prudence.
J)Fiduciary obligation of faithfulness; subordination of self-interest.
K)Must act within their respective authority.
L)The combination of assets of two or more corporations into one of the corporations.
M)The combination of two or more corporations into a new corporation.
N)Precludes imposing liability on directors and officers for honest mistakes in judgment if they act in good faith with due care.
O)A general invitation to all the shareholders of a target company to sell their shares at a specified price. 
A) Directors are elected by a plurality of votes. 
B) Authorization to vote another's shares at a shareholder meeting. 
C) Permits a domestic business corporation to become a domestic or foreign partnership, LLC, or other entity; permits a domestic of foreign partnership, LLC, or other entity to become a domestic business corporation. 
D) Change of a corporation's state of incorporation. 
E) Entitles each shareholder to give one candidate as many votes as the number of directors to be elected multiplied by the number of shares owned.
F)Minimum number necessary to be present at a meeting in order to transact business.
G)Brought by shareholder on behalf of the corporation to enforce a right belonging to the corporation.
H)Brought by a shareholder to enforce a claim against the corporation based upon his ownership of shares.
I)Must exercise ordinary care and prudence.
J)Fiduciary obligation of faithfulness; subordination of self-interest.
K)Must act within their respective authority.
L)The combination of assets of two or more corporations into one of the corporations.
M)The combination of two or more corporations into a new corporation.
N)Precludes imposing liability on directors and officers for honest mistakes in judgment if they act in good faith with due care.
O)A general invitation to all the shareholders of a target company to sell their shares at a specified price. O

Question 3

Match each statement with the correct term below.
-quorum

Accepted Answer

A) Directors are elected by a plurality of votes. 
B) Authorization to vote another's shares at a shareholder meeting. 
C) Permits a domestic business corporation to become a domestic or foreign partnership, LLC, or other entity; permits a domestic of foreign partnership, LLC, or other entity to become a domestic business corporation. 
D) Change of a corporation's state of incorporation. 
E) Entitles each shareholder to give one candidate as many votes as the number of directors to be elected multiplied by the number of shares owned.
F)Minimum number necessary to be present at a meeting in order to transact business.
G)Brought by shareholder on behalf of the corporation to enforce a right belonging to the corporation.
H)Brought by a shareholder to enforce a claim against the corporation based upon his ownership of shares.
I)Must exercise ordinary care and prudence.
J)Fiduciary obligation of faithfulness; subordination of self-interest.
K)Must act within their respective authority.
L)The combination of assets of two or more corporations into one of the corporations.
M)The combination of two or more corporations into a new corporation.
N)Precludes imposing liability on directors and officers for honest mistakes in judgment if they act in good faith with due care.
O)A general invitation to all the shareholders of a target company to sell their shares at a specified price. 
A) Directors are elected by a plurality of votes. 
B) Authorization to vote another's shares at a shareholder meeting. 
C) Permits a domestic business corporation to become a domestic or foreign partnership, LLC, or other entity; permits a domestic of foreign partnership, LLC, or other entity to become a domestic business corporation. 
D) Change of a corporation's state of incorporation. 
E) Entitles each shareholder to give one candidate as many votes as the number of directors to be elected multiplied by the number of shares owned.
F)Minimum number necessary to be present at a meeting in order to transact business.
G)Brought by shareholder on behalf of the corporation to enforce a right belonging to the corporation.
H)Brought by a shareholder to enforce a claim against the corporation based upon his ownership of shares.
I)Must exercise ordinary care and prudence.
J)Fiduciary obligation of faithfulness; subordination of self-interest.
K)Must act within their respective authority.
L)The combination of assets of two or more corporations into one of the corporations.
M)The combination of two or more corporations into a new corporation.
N)Precludes imposing liability on directors and officers for honest mistakes in judgment if they act in good faith with due care.
O)A general invitation to all the shareholders of a target company to sell their shares at a specified price. F

Question 4

Match each statement with the correct term below.
-business judgment rule

Accepted Answer

A) Directors are elected by a plurality of votes. 
B) Authorization to vote another's shares at a shareholder meeting. 
C) Permits a domestic business corporation to become a domestic or foreign partnership, LLC, or other entity; permits a domestic of foreign partnership, LLC, or other entity to become a domestic business corporation. 
D) Change of a corporation's state of incorporation. 
E) Entitles each shareholder to give one candidate as many votes as the number of directors to be elected multiplied by the number of shares owned.
F)Minimum number necessary to be present at a meeting in order to transact business.
G)Brought by shareholder on behalf of the corporation to enforce a right belonging to the corporation.
H)Brought by a shareholder to enforce a claim against the corporation based upon his ownership of shares.
I)Must exercise ordinary care and prudence.
J)Fiduciary obligation of faithfulness; subordination of self-interest.
K)Must act within their respective authority.
L)The combination of assets of two or more corporations into one of the corporations.
M)The combination of two or more corporations into a new corporation.
N)Precludes imposing liability on directors and officers for honest mistakes in judgment if they act in good faith with due care.
O)A general invitation to all the shareholders of a target company to sell their shares at a specified price. 
A) Directors are elected by a plurality of votes. 
B) Authorization to vote another's shares at a shareholder meeting. 
C) Permits a domestic business corporation to become a domestic or foreign partnership, LLC, or other entity; permits a domestic of foreign partnership, LLC, or other entity to become a domestic business corporation. 
D) Change of a corporation's state of incorporation. 
E) Entitles each shareholder to give one candidate as many votes as the number of directors to be elected multiplied by the number of shares owned.
F)Minimum number necessary to be present at a meeting in order to transact business.
G)Brought by shareholder on behalf of the corporation to enforce a right belonging to the corporation.
H)Brought by a shareholder to enforce a claim against the corporation based upon his ownership of shares.
I)Must exercise ordinary care and prudence.
J)Fiduciary obligation of faithfulness; subordination of self-interest.
K)Must act within their respective authority.
L)The combination of assets of two or more corporations into one of the corporations.
M)The combination of two or more corporations into a new corporation.
N)Precludes imposing liability on directors and officers for honest mistakes in judgment if they act in good faith with due care.
O)A general invitation to all the shareholders of a target company to sell their shares at a specified price.

Question 5

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) None of the above. 
A) appraisal remedy 
B) U.C.C. 
C) Statutory Close Corporation Supplement 
D) None of the above.

Question 6

Match each statement with the correct term below.
-incorporator

Accepted Answer

A) Debt agreement specifying loan terms. 
B) One created under the laws of a given state. 
C) One created under the laws of any other state or jurisdiction. 
D) Person who takes the preliminary steps to organize a corporation. 
E) Person who signs the articles of incorporation.
F)Rules governing a corporation's internal management.
G)One formed in substantial compliance with the incorporation statute and having all corporate attributes.
H)One not formed in compliance with the statute but recognized for most purposes as a corporation.
I)One whose shares are owned by a large number of people and are widely traded.
J)One created to administer a unit of local civil government.
K)Any action taken or contract made by a corporation that goes beyond its express and implied powers.
L)Source of capital creating no ownership interest and involving the corporation's promise to repay funds loaned to it.
M)A type of debt security.
N)Person who agrees to purchase stock in a corporation.
O)Condition the payment of interest to some extent on corporate earnings.
P)Bonds subject to redemption.
Q)Eligible corporation electing to be taxed as a partnership.
R)Corporate ownership interest having superior contractual rights with regard to dividends, liquidation rights, or both.
S)May be exchanged for other securities.
T)Claims against a corporation's general assets and also a lien on specific property.
U)Basic organizational document of a corporation; charter.
V)Shares reacquired by a corporation.
W)Opportunity to purchase a pro rata share of new stock offerings.
X)Source of capital creating an ownership interest in the corporation.
Y)A corporation's exercise of the right to repurchase its own shares. 
A) Debt agreement specifying loan terms. 
B) One created under the laws of a given state. 
C) One created under the laws of any other state or jurisdiction. 
D) Person who takes the preliminary steps to organize a corporation. 
E) Person who signs the articles of incorporation.
F)Rules governing a corporation's internal management.
G)One formed in substantial compliance with the incorporation statute and having all corporate attributes.
H)One not formed in compliance with the statute but recognized for most purposes as a corporation.
I)One whose shares are owned by a large number of people and are widely traded.
J)One created to administer a unit of local civil government.
K)Any action taken or contract made by a corporation that goes beyond its express and implied powers.
L)Source of capital creating no ownership interest and involving the corporation's promise to repay funds loaned to it.
M)A type of debt security.
N)Person who agrees to purchase stock in a corporation.
O)Condition the payment of interest to some extent on corporate earnings.
P)Bonds subject to redemption.
Q)Eligible corporation electing to be taxed as a partnership.
R)Corporate ownership interest having superior contractual rights with regard to dividends, liquidation rights, or both.
S)May be exchanged for other securities.
T)Claims against a corporation's general assets and also a lien on specific property.
U)Basic organizational document of a corporation; charter.
V)Shares reacquired by a corporation.
W)Opportunity to purchase a pro rata share of new stock offerings.
X)Source of capital creating an ownership interest in the corporation.
Y)A corporation's exercise of the right to repurchase its own shares.

Question 7

A short-form merger:

Accepted Answer

A) is not a merger at all but a form of consolidation. 
B) may be undertaken without director approval. 
C) allows no appraisal rights for the parent's minority shareholders. 
D) requires shareholder approval. 
A) is not a merger at all but a form of consolidation. 
B) may be undertaken without director approval. 
C) allows no appraisal rights for the parent's minority shareholders. 
D) requires shareholder approval.

Question 8

The Revised Act takes the position that consolidations are,for all practical purposes,obsolete.

Accepted Answer

A) True 
 B)False

Question 9

Match each statement with the correct term below.
-domestication

Accepted Answer

A) Directors are elected by a plurality of votes. 
B) Authorization to vote another's shares at a shareholder meeting. 
C) Permits a domestic business corporation to become a domestic or foreign partnership, LLC, or other entity; permits a domestic of foreign partnership, LLC, or other entity to become a domestic business corporation. 
D) Change of a corporation's state of incorporation. 
E) Entitles each shareholder to give one candidate as many votes as the number of directors to be elected multiplied by the number of shares owned.
F)Minimum number necessary to be present at a meeting in order to transact business.
G)Brought by shareholder on behalf of the corporation to enforce a right belonging to the corporation.
H)Brought by a shareholder to enforce a claim against the corporation based upon his ownership of shares.
I)Must exercise ordinary care and prudence.
J)Fiduciary obligation of faithfulness; subordination of self-interest.
K)Must act within their respective authority.
L)The combination of assets of two or more corporations into one of the corporations.
M)The combination of two or more corporations into a new corporation.
N)Precludes imposing liability on directors and officers for honest mistakes in judgment if they act in good faith with due care.
O)A general invitation to all the shareholders of a target company to sell their shares at a specified price. 
A) Directors are elected by a plurality of votes. 
B) Authorization to vote another's shares at a shareholder meeting. 
C) Permits a domestic business corporation to become a domestic or foreign partnership, LLC, or other entity; permits a domestic of foreign partnership, LLC, or other entity to become a domestic business corporation. 
D) Change of a corporation's state of incorporation. 
E) Entitles each shareholder to give one candidate as many votes as the number of directors to be elected multiplied by the number of shares owned.
F)Minimum number necessary to be present at a meeting in order to transact business.
G)Brought by shareholder on behalf of the corporation to enforce a right belonging to the corporation.
H)Brought by a shareholder to enforce a claim against the corporation based upon his ownership of shares.
I)Must exercise ordinary care and prudence.
J)Fiduciary obligation of faithfulness; subordination of self-interest.
K)Must act within their respective authority.
L)The combination of assets of two or more corporations into one of the corporations.
M)The combination of two or more corporations into a new corporation.
N)Precludes imposing liability on directors and officers for honest mistakes in judgment if they act in good faith with due care.
O)A general invitation to all the shareholders of a target company to sell their shares at a specified price.

Question 10

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 11

The combination of two or more corporations' total assets,title to which is vested in one of them,known as the surviving corporation,is a:

Accepted Answer

A) dissolution. 
B) liquidation. 
C) consolidation. 
D) merger. 
A) dissolution. 
B) liquidation. 
C) consolidation. 
D) merger.

Question 12

AB Corporation consolidates with ZX Corporation to form A-Z Corporation.The debts of AB Corporation are:

Accepted Answer

A) assumed by the stockholders of AB Corporation. 
B) discharged by the process of consolidation. 
C) assumed by A-Z Corporation. 
D) discharged by the issuance of new stock in A-Z Corporation. 
A) assumed by the stockholders of AB Corporation. 
B) discharged by the process of consolidation. 
C) assumed by A-Z Corporation. 
D) discharged by the issuance of new stock in A-Z Corporation.

Question 13

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 14

The right of dissent results in payment of:

Accepted Answer

A) a damage award to the shareholder. 
B) a price in exchange for his shares. 
C) treble damages for violation of the charter. 
D) a bonus to dissenting shareholders. 
A) a damage award to the shareholder. 
B) a price in exchange for his shares. 
C) treble damages for violation of the charter. 
D) a bonus to dissenting shareholders.

Question 15

Match each statement with the correct term below.
-duty of loyalty

Accepted Answer

A) Directors are elected by a plurality of votes. 
B) Authorization to vote another's shares at a shareholder meeting. 
C) Permits a domestic business corporation to become a domestic or foreign partnership, LLC, or other entity; permits a domestic of foreign partnership, LLC, or other entity to become a domestic business corporation. 
D) Change of a corporation's state of incorporation. 
E) Entitles each shareholder to give one candidate as many votes as the number of directors to be elected multiplied by the number of shares owned.
F)Minimum number necessary to be present at a meeting in order to transact business.
G)Brought by shareholder on behalf of the corporation to enforce a right belonging to the corporation.
H)Brought by a shareholder to enforce a claim against the corporation based upon his ownership of shares.
I)Must exercise ordinary care and prudence.
J)Fiduciary obligation of faithfulness; subordination of self-interest.
K)Must act within their respective authority.
L)The combination of assets of two or more corporations into one of the corporations.
M)The combination of two or more corporations into a new corporation.
N)Precludes imposing liability on directors and officers for honest mistakes in judgment if they act in good faith with due care.
O)A general invitation to all the shareholders of a target company to sell their shares at a specified price. 
A) Directors are elected by a plurality of votes. 
B) Authorization to vote another's shares at a shareholder meeting. 
C) Permits a domestic business corporation to become a domestic or foreign partnership, LLC, or other entity; permits a domestic of foreign partnership, LLC, or other entity to become a domestic business corporation. 
D) Change of a corporation's state of incorporation. 
E) Entitles each shareholder to give one candidate as many votes as the number of directors to be elected multiplied by the number of shares owned.
F)Minimum number necessary to be present at a meeting in order to transact business.
G)Brought by shareholder on behalf of the corporation to enforce a right belonging to the corporation.
H)Brought by a shareholder to enforce a claim against the corporation based upon his ownership of shares.
I)Must exercise ordinary care and prudence.
J)Fiduciary obligation of faithfulness; subordination of self-interest.
K)Must act within their respective authority.
L)The combination of assets of two or more corporations into one of the corporations.
M)The combination of two or more corporations into a new corporation.
N)Precludes imposing liability on directors and officers for honest mistakes in judgment if they act in good faith with due care.
O)A general invitation to all the shareholders of a target company to sell their shares at a specified price.

Question 16

Match each statement with the correct term below.
-proxy

Accepted Answer

A) Directors are elected by a plurality of votes. 
B) Authorization to vote another's shares at a shareholder meeting. 
C) Permits a domestic business corporation to become a domestic or foreign partnership, LLC, or other entity; permits a domestic of foreign partnership, LLC, or other entity to become a domestic business corporation. 
D) Change of a corporation's state of incorporation. 
E) Entitles each shareholder to give one candidate as many votes as the number of directors to be elected multiplied by the number of shares owned.
F)Minimum number necessary to be present at a meeting in order to transact business.
G)Brought by shareholder on behalf of the corporation to enforce a right belonging to the corporation.
H)Brought by a shareholder to enforce a claim against the corporation based upon his ownership of shares.
I)Must exercise ordinary care and prudence.
J)Fiduciary obligation of faithfulness; subordination of self-interest.
K)Must act within their respective authority.
L)The combination of assets of two or more corporations into one of the corporations.
M)The combination of two or more corporations into a new corporation.
N)Precludes imposing liability on directors and officers for honest mistakes in judgment if they act in good faith with due care.
O)A general invitation to all the shareholders of a target company to sell their shares at a specified price. 
A) Directors are elected by a plurality of votes. 
B) Authorization to vote another's shares at a shareholder meeting. 
C) Permits a domestic business corporation to become a domestic or foreign partnership, LLC, or other entity; permits a domestic of foreign partnership, LLC, or other entity to become a domestic business corporation. 
D) Change of a corporation's state of incorporation. 
E) Entitles each shareholder to give one candidate as many votes as the number of directors to be elected multiplied by the number of shares owned.
F)Minimum number necessary to be present at a meeting in order to transact business.
G)Brought by shareholder on behalf of the corporation to enforce a right belonging to the corporation.
H)Brought by a shareholder to enforce a claim against the corporation based upon his ownership of shares.
I)Must exercise ordinary care and prudence.
J)Fiduciary obligation of faithfulness; subordination of self-interest.
K)Must act within their respective authority.
L)The combination of assets of two or more corporations into one of the corporations.
M)The combination of two or more corporations into a new corporation.
N)Precludes imposing liability on directors and officers for honest mistakes in judgment if they act in good faith with due care.
O)A general invitation to all the shareholders of a target company to sell their shares at a specified price.

Question 17

A shareholder who opposes a fundamental change to the corporation may make a written or oral demand within the prescribed time period in order to be entitled to payment for his shares.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

The courts may grant a petition of involuntary dissolution if shareholders:

Accepted Answer

A) do not approve of fundamental changes of the board. 
B) show that the corporation has not kept adequate records or filed annual reports. 
C) did not receive their dividends. 
D) show that corporate assets are being squandered. 
A) do not approve of fundamental changes of the board. 
B) show that the corporation has not kept adequate records or filed annual reports. 
C) did not receive their dividends. 
D) show that corporate assets are being squandered.

Exam 36: Fundamental Changes of Corporations

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

Match each statement with the correct term below. -tender offer

Match each statement with the correct term below. -quorum

Match each statement with the correct term below. -business judgment rule

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

Match each statement with the correct term below. -incorporator

A short-form merger:

The Revised Act takes the position that consolidations are,for all practical purposes,obsolete.

Match each statement with the correct term below. -domestication

The combination of two or more corporations' total assets,title to which is vested in one of them,known as the surviving corporation,is a:

AB Corporation consolidates with ZX Corporation to form A-Z Corporation.The debts of AB Corporation are:

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

The right of dissent results in payment of:

Match each statement with the correct term below. -duty of loyalty

Match each statement with the correct term below. -proxy

A shareholder who opposes a fundamental change to the corporation may make a written or oral demand within the prescribed time period in order to be entitled to payment for his shares.

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

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

The courts may grant a petition of involuntary dissolution if shareholders:

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

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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

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Accountants Legal Liability

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Introduction to Property, property Insurance, Bailments, and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

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