Question 1

Which of the following is true of a subsidiary of a multinational corporation present in a foreign country?

Accepted Answer

A)  The subsidiary corporation is organized under the laws of the foreign country. 
B)  There is no liability shield between the parent company and the subsidiary. 
C)  The parent company is wholly responsible for torts committed by the subsidiary. 
D)  The subsidiary corporation is not considered a separate legal entity. 
A)  The subsidiary corporation is organized under the laws of the foreign country. 
B)  There is no liability shield between the parent company and the subsidiary. 
C)  The parent company is wholly responsible for torts committed by the subsidiary. 
D)  The subsidiary corporation is not considered a separate legal entity.

Question 2

A shareholder can only submit a resolution to be considered by other shareholders if he or she has 1 percent or more of the total shares of the company.

Accepted Answer

A) True 
 B)False

Question 3

A short-form merger does not require the approval of the board of directors of the subsidiary corporation.

Accepted Answer

A) True 
 B)False

Question 4

The incumbent management cannot issue additional shares in the market to defeat a hostile tender offer.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is true of a branch office of a multinational corporation?

Accepted Answer

A)  Branch offices cannot be setup in foreign countries. 
B)  Branch offices are considered separate legal entities. 
C)  There is no liability shield between the corporation and the branch office. 
D)  The corporation is not liable for the torts committed by personnel of the branch office. 
A)  Branch offices cannot be setup in foreign countries. 
B)  Branch offices are considered separate legal entities. 
C)  There is no liability shield between the corporation and the branch office. 
D)  The corporation is not liable for the torts committed by personnel of the branch office.

Question 6

Which of the following best defines a subsidiary corporation?

Accepted Answer

A)  a corporation that is absorbed into a merger 
B)  a corporation that continues to exist after a merger 
C)  a corporation that has bought all the shares of another corporation 
D)  a corporation that is owned by the parent corporation in a share exchange 
A)  a corporation that is absorbed into a merger 
B)  a corporation that continues to exist after a merger 
C)  a corporation that has bought all the shares of another corporation 
D)  a corporation that is owned by the parent corporation in a share exchange

Question 7

Shareholder resolutions cannot be made when a corporation is soliciting proxies from its shareholders.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following defines a proxy contest?

Accepted Answer

A)  an instance of proxies awarded to the shareholder with the highest bid 
B)  an event in which insurgent shareholders and incumbent directors solicit proxies from other shareholders 
C)  an event in which proxies are chosen by voting between different factions of shareholders 
D)  an event in which a corporation seeks affirmative majority from its shareholders in the event of a hostile tender 
A)  an instance of proxies awarded to the shareholder with the highest bid 
B)  an event in which insurgent shareholders and incumbent directors solicit proxies from other shareholders 
C)  an event in which proxies are chosen by voting between different factions of shareholders 
D)  an event in which a corporation seeks affirmative majority from its shareholders in the event of a hostile tender

Question 9

The ________ states that any increase in price paid for shares tendered must be offered to all shareholders, even those who have previously tendered their shares.

Accepted Answer

A)  pro rate rule 
B)  fair price rule 
C)  Williams Act 
D)  antifraud provision of the Securities and Exchange Commission 
A)  pro rate rule 
B)  fair price rule 
C)  Williams Act 
D)  antifraud provision of the Securities and Exchange Commission

Question 10

Courts are permitted to order a new election in case of fraudulent proxy solicitation.

Accepted Answer

A) True 
 B)False

Question 11

What is a proxy? State the federal rules that govern a proxy statement.

Accepted Answer

A proxy is a written document that is co

Question 12

Section 14(e) of the Williams Act is a(n) ________ regarding tender offers.

Accepted Answer

A)  antifraud provision 
B)  shareholders rights provision 
C)  merger provision 
D)  acquisition provision 
A)  antifraud provision 
B)  shareholders rights provision 
C)  merger provision 
D)  acquisition provision

Question 13

Which of the following is true of proxies?

Accepted Answer

A)  Proxies are not permitted to be submitted electronically. 
B)  Proxies are signed by a corporation and sent to shareholders. 
C)  Directors or officers of a corporation cannot hold proxies. 
D)  Corporations are permitted to solicit proxies from shareholders. 
A)  Proxies are not permitted to be submitted electronically. 
B)  Proxies are signed by a corporation and sent to shareholders. 
C)  Directors or officers of a corporation cannot hold proxies. 
D)  Corporations are permitted to solicit proxies from shareholders.

Question 14

Which of the following best defines a merged corporation?

Accepted Answer

A)  a corporation that is absorbed in the merger and ceases to exist after the merger 
B)  a corporation that is absorbed in the merger and continues to exist after the merger 
C)  a corporation that is not absorbed in the merger but acquired stake in the surviving corporation 
D)  a corporation that is not absorbed in the merger but is owned by a parent company 
A)  a corporation that is absorbed in the merger and ceases to exist after the merger 
B)  a corporation that is absorbed in the merger and continues to exist after the merger 
C)  a corporation that is not absorbed in the merger but acquired stake in the surviving corporation 
D)  a corporation that is not absorbed in the merger but is owned by a parent company

Question 15

A shareholder resolution must be dropped if it is not favored by the management.

Accepted Answer

A) True 
 B)False

Question 16

Hostile tender offers are tender offers made without the permission of the target company's management.

Accepted Answer

A) True 
 B)False

Question 17

What does the Delaware antitakeover statute provide? How can an acquirer evade the restrictions imposed by this statute?

Accepted Answer

The Delaware antitakeover statute provid

Question 18

An ordinary merger increases the number of voting shares of the surviving corporation by 23 percent. Which of the following is required in this context?

Accepted Answer

A)  a unanimous vote by the incumbent directors 
B)  a majority vote of the board of directors 
C)  a majority vote of the shareholders 
D)  an affirmative vote by at least 30 percent of the shareholders 
A)  a unanimous vote by the incumbent directors 
B)  a majority vote of the board of directors 
C)  a majority vote of the shareholders 
D)  an affirmative vote by at least 30 percent of the shareholders

Question 19

Explain the factors that lead to a proxy contest. What is its outcome?

Accepted Answer

One or more shareholders may oppose the

Question 20

Instaworks Inc. wants to acquire IOK Corp. Instaworks makes a tender offer to the shareholders of IOK to acquire their shares of IOK without the permission of the latter corporation's board of directors. This is a ________ tender offer.

Accepted Answer

A)  cogent 
B)  single-point 
C)  persuasive 
D)  hostile 
A)  cogent 
B)  single-point 
C)  persuasive 
D)  hostile

Exam 38: Corporate Acquisitions and Multinational Corporations

Which of the following is true of a subsidiary of a multinational corporation present in a foreign country?

A shareholder can only submit a resolution to be considered by other shareholders if he or she has 1 percent or more of the total shares of the company.

A short-form merger does not require the approval of the board of directors of the subsidiary corporation.

The incumbent management cannot issue additional shares in the market to defeat a hostile tender offer.

Which of the following is true of a branch office of a multinational corporation?

Which of the following best defines a subsidiary corporation?

Shareholder resolutions cannot be made when a corporation is soliciting proxies from its shareholders.

Which of the following defines a proxy contest?

The ________ states that any increase in price paid for shares tendered must be offered to all shareholders, even those who have previously tendered their shares.

Courts are permitted to order a new election in case of fraudulent proxy solicitation.

What is a proxy? State the federal rules that govern a proxy statement.

Section 14(e) of the Williams Act is a(n) ________ regarding tender offers.

Which of the following is true of proxies?

Which of the following best defines a merged corporation?

A shareholder resolution must be dropped if it is not favored by the management.

Hostile tender offers are tender offers made without the permission of the target company's management.

What does the Delaware antitakeover statute provide? How can an acquirer evade the restrictions imposed by this statute?

An ordinary merger increases the number of voting shares of the surviving corporation by 23 percent. Which of the following is required in this context?

Explain the factors that lead to a proxy contest. What is its outcome?

Instaworks Inc. wants to acquire IOK Corp. Instaworks makes a tender offer to the shareholders of IOK to acquire their shares of IOK without the permission of the latter corporation's board of directors. This is a ________ tender offer.

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