Question 1

Business Inc. acquires all of the assets of Commerce Inc. by direct purchase. Dona is a Commerce shareholder who does not approve of the deal. In most states, Dona can

Accepted Answer

A)  reverse the deal so Commerce acquires all of the assets of Business. 
B)  insist that the companies carry out their corporate purposes. 
C)  demand appraisal rights. 
D)  require the parties to cancel the deal.

Question 2

Generally, a corporation that acquires any assets of another corporation needs to obtain shareholder approval for the purchase.

Accepted Answer

A) True 
 B)False

Question 3

Lunch Trucks Inc. owns more than 90 percent of the shares of Kitchens Company. A plan for a merger of Lunch Trucks and Kitchens must be approved by the shareholders of

Accepted Answer

A)  both corporations. 
B)  Lunch Trucks only. 
C)  Kitchens only. 
D)  neither corporation.

Question 4

An appraisal right is available only when a federal statute specifically provides for it.

Accepted Answer

A) True 
 B)False

Question 5

Lender Inc. owns all of the shares of Mortgage Inc. Lender Inc. is

Accepted Answer

A)  a holding company. 
B)  a parent corporation. 
C)  a subsidiary corporation. 
D)  all of the choices.

Question 6

Quantum Company exchanges some of its shares for some of the shares of Rocket Corporation. The exchange is used to create Space Inc., whose business activity is to hold the shares of the two companies. Space Inc. is

Accepted Answer

A)  a holding company. 
B)  a parent corporation. 
C)  a subsidiary corporation. 
D)  a foreign corporation.

Question 7

The business judgment rule may apply to determine whether directors acted reasonably in resisting a takeover attempt.

Accepted Answer

A) True 
 B)False

Question 8

Code Company combines its assets and liabilities with those of Design Corporation to form Engineer Inc. Code and Design cease to exist. With respect to the assets of Code and Design, Engineer Inc. acquires

Accepted Answer

A)  none. 
B)  only those acquired after the combination was proposed. 
C)  an amount equal to the ratio of the firms' pre-merger market values. 
D)  all.

Question 9

A short-form merger is the acquisition of control over a corporation through a purchase of stock.

Accepted Answer

A) True 
 B)False

Question 10

A shareholder may not petition a court for corporate dissolution.

Accepted Answer

A) True 
 B)False

Question 11

The shareholder's appraisal right does not normally apply to sales of substantially all of the corporate assets.

Accepted Answer

A) True 
 B)False

Question 12

Through a certain transaction, Café Inc. acquires all of the shares of Diner Corporation for some of Café's shares. Both Café and Diner continue to exist. This is

Accepted Answer

A)  a consolidation. 
B)  a share exchange. 
C)  a short-form merger. 
D)  a purchase of assets.

Exam 35: Corporate Mergers, Takeovers, and Termination

Business Inc. acquires all of the assets of Commerce Inc. by direct purchase. Dona is a Commerce shareholder who does not approve of the deal. In most states, Dona can

Generally, a corporation that acquires any assets of another corporation needs to obtain shareholder approval for the purchase.

Lunch Trucks Inc. owns more than 90 percent of the shares of Kitchens Company. A plan for a merger of Lunch Trucks and Kitchens must be approved by the shareholders of

An appraisal right is available only when a federal statute specifically provides for it.

Lender Inc. owns all of the shares of Mortgage Inc. Lender Inc. is

Quantum Company exchanges some of its shares for some of the shares of Rocket Corporation. The exchange is used to create Space Inc., whose business activity is to hold the shares of the two companies. Space Inc. is

The business judgment rule may apply to determine whether directors acted reasonably in resisting a takeover attempt.

Code Company combines its assets and liabilities with those of Design Corporation to form Engineer Inc. Code and Design cease to exist. With respect to the assets of Code and Design, Engineer Inc. acquires

A short-form merger is the acquisition of control over a corporation through a purchase of stock.

A shareholder may not petition a court for corporate dissolution.

The shareholder's appraisal right does not normally apply to sales of substantially all of the corporate assets.

Through a certain transaction, Café Inc. acquires all of the shares of Diner Corporation for some of Café's shares. Both Café and Diner continue to exist. This is