Question 1

Shareholder approval of a fundamental change means a unanimous vote.

Accepted Answer

A) True 
 B)False

Question 2

A court may dissolve a corporation in a proceeding brought by a shareholder when:

Accepted Answer

A) the corporate assets are being misapplied. 
B) the directors are deadlocked and the shareholders are unable to break the deadlock. 
C) the shareholders are deadlocked and have failed to elect directors for at least two consecutive annual meetings. 
D) All of the above. 
A) the corporate assets are being misapplied. 
B) the directors are deadlocked and the shareholders are unable to break the deadlock. 
C) the shareholders are deadlocked and have failed to elect directors for at least two consecutive annual meetings. 
D) All of the above.

Question 3

A sale of substantially all of the assets of a corporation that is in the ordinary course of business of the corporation will not require shareholder approval.

Accepted Answer

A) True 
 B)False

Question 4

Match each statement with the correct term below.
-derivative suit

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

Which of the following is NOT a basis for involuntary dissolution?

Accepted Answer

A) A proceeding initiated by the secretary of state, if it is established that the corporation failed to pay its franchise tax. 
B) The directors are deadlocked and the shareholders cannot break the deadlock. 
C) The shareholders dissent to a merger and are asserting their appraisal rights. 
D) None of the above. 
A) A proceeding initiated by the secretary of state, if it is established that the corporation failed to pay its franchise tax. 
B) The directors are deadlocked and the shareholders cannot break the deadlock. 
C) The shareholders dissent to a merger and are asserting their appraisal rights. 
D) None of the above.

Question 6

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

Accepted Answer

A) fair dealing. 
B) fair price. 
C) both (a) and (b). 
D) tender. 
A) fair dealing. 
B) fair price. 
C) both (a) and (b). 
D) tender.

Question 7

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 the above. 
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 the above.

Question 8

Match each statement with the correct term below.
-secured bonds

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 9

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

Accepted Answer

A) True 
 B)False

Question 10

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 11

Match each statement with the correct term below.
-cumulative voting

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 12

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

Accepted Answer

A) True 
 B)False

Question 13

Match each statement with the correct term below.
-Subchapter S

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 14

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

Accepted Answer

A) True 
 B)False

Question 15

Brown Corporation purchased all of the stock of Gremlin Corporation.The appraisal remedy is not available to a dissenting shareholder of Brown Corporation.

Accepted Answer

A) True 
 B)False

Exam 36: Fundamental Changes of Corporations

Shareholder approval of a fundamental change means a unanimous vote.

A court may dissolve a corporation in a proceeding brought by a shareholder when:

A sale of substantially all of the assets of a corporation that is in the ordinary course of business of the corporation will not require shareholder approval.

Match each statement with the correct term below. -derivative suit

Which of the following is NOT a basis for involuntary dissolution?

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

The Revised Act grants dissenters' rights:

Match each statement with the correct term below. -secured bonds

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.

Match each statement with the correct term below. -cumulative voting

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

Match each statement with the correct term below. -Subchapter S

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

Brown Corporation purchased all of the stock of Gremlin Corporation.The appraisal remedy is not available to a dissenting shareholder of Brown Corporation.

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

Environmental Law

International Business Law

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

Interests in Real Property

Transfer and Control of Real Property

Trusts and Wills

Filters