Question 1

Refer to Fact Pattern 40-2A. Royal Oil assumes

Accepted Answer

A)  all of Petro's and Quality's assets. 
B)  half of Petro's and Quality's assets. 
C)  none of Petro's and Quality's assets. 
D)  only debts that Petro and Quality incurred after a combina?tion was proposed.

Question 2

Once formed, a corporation cannot be dissolved voluntarily.

Accepted Answer

A) True 
 B)False

Question 3

Fact Pattern 40-1B 
Shrimp Boat Company decides to consolidate its operations with Trawlers, Inc., to form Unique Fishers Corporation .
-Refer to Fact Pattern 40-1B. Trawlers had rights in certain property. Af?ter the consolidation, UFC acquires the rights

Accepted Answer

A)  automatically. 
B)  only after completing certain additional statutory procedures. 
C)  only if Trawlers' former shareholders expressly approve. 
D)  only if the acquisition is a specified result of the consolidation.

Question 4

Fact Pattern 40-3A 
Atlantic Corporation's articles of incorporation prohibit a sale of its assets with?out a vote of the board of directors. Atlantic's officers sell some assets to Pacific Company without notice to the board. The officers also fail to pay Atlantic's taxes on time, and some Atlantic funds are not accounted for.
-Refer to Fact Pattern 40-3A. With respect to Atlantic's share?holders, this conduct is most likely

Accepted Answer

A)  not oppressive because it is undertaken by Atlantic's officers. 
B)  oppressive because Atlantic's directors may be personally liable. 
C)  oppressive because Atlantic's shareholders may be personally liable. 
D)  oppressive because it departs from the standards of fair dealing.

Question 5

Fact Pattern 40-3A 
Atlantic Corporation's articles of incorporation prohibit a sale of its assets with?out a vote of the board of directors. Atlantic's officers sell some assets to Pacific Company without notice to the board. The officers also fail to pay Atlantic's taxes on time, and some Atlantic funds are not accounted for.
-Refer to Fact Pattern 40-3A. The appropriate remedy is most likely

Accepted Answer

A)  a sale of the rest of Atlantic's assets to its directors and shareholders. 
B)  Atlantic's consolidation or merger with Pacific. 
C)  Atlantic's dissolution. 
D)  payment of damages to Atlantic's officers.

Question 6

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

Accepted Answer

A)  a consolidation. 
B)  a share exchange. 
C)  a short-form merger. 
D)  a termination.

Question 7

Realty Credit Company and Second Mortgage Corporation plan to con?solidate. Most likely, the articles of consolidation will be filed with

Accepted Answer

A)  the county recording office. 
B)  the Securities and Exchange Commission. 
C)  the state's secretary of state. 
D)  the U.S. Department of Justice.

Question 8

Florence and Grady pool their money and talents to form Happy Home Builders, Inc. They are the firm's only shareholders, directors, and officers. After five years of declining home prices, they de?cide to cease business. Can they simply dis?solve their corporation at will? If so, what are the steps in the process?

Accepted Answer

The answer of Florence and Grady pool their money and...

Question 9

Shareholder approval is required when a corporation sells all of its as?sets to an?other company.

Accepted Answer

A) True 
 B)False

Question 10

Like other corporations, Beauty Supplies Corporation can extend its operations through

Accepted Answer

A)  a consolidation. 
B)  a dissolution. 
C)  a termination. 
D)  a winding up.

Question 11

The main difference between a consolidation and a merger is that after a consolidation there are at least two surviving corporations.

Accepted Answer

A) True 
 B)False

Question 12

Mall Stores Corporation owns 95 percent of the shares of Niche Retail Corporation. Through a certain transaction, Mall Stores combines with Niche Retail, but only Mall Stores continues to exist. This is

Accepted Answer

A)  a consolidation. 
B)  a share exchange. 
C)  a short-form merger. 
D)  a termination.

Question 13

Winding up a corporation's affairs can only be performed under court supervision.

Accepted Answer

A) True 
 B)False

Question 14

Motor Parts Corporation offers to buy the stock of NASCAR Products Corporation (NPC). NPC's directors oppose the offer. Orin and other NPC shareholders file a suit, alleging a breach of the directors' fiduciary duties. Most likely, the court will

Accepted Answer

A)  apply the business judgment rule to analyze the directors' acts. 
B)  dismiss the suit as a non-judicial dispute over "fair value." 
C)  evaluate the terms of the deal on the basis of antitrust law. 
D)  order the shareholders to be paid a "premium" for their stock.

Question 15

Spice Corp. wants to acquire all the assets of Sugar Corp. Spice plans to pay for the assets by issuing its own corporate stock. Spice's board of directors has already approved the merger. In what circumstances would the approval of Spice's shareholders be required for this merger? Is the approval of Sugar's shareholders necessary? Explain.

Accepted Answer

The answer of Spice Corp. wants to acquire all the...

Question 16

Jen files a suit against Kopper Kettle Company. While the suit is pending, Kopper Kettle merges with Luminous Pans, Inc., with Luminous absorbing Kopper Kettle. Now, liability in the suit, if any, rests with

Accepted Answer

A)  Jen. 
B)  Kopper Kettle. 
C)  Luminous. 
D)  no one.

Question 17

After a consolidation, there are two or more surviving corporations.

Accepted Answer

A) True 
 B)False

Question 18

After a merger, the surviving corporation inherits all of the disappearing corporation's preexisting rights.

Accepted Answer

A) True 
 B)False

Question 19

Marble Meats Corporation (MMC) proposes to combine with Natural Farms, Inc., and asks MMC shareholders to vote on the proposal. Omar, an MMC shareholder, votes against it, but is outvoted by the other shareholders. Is there an action that Omar can take to avoid being forced to go along with the transac?tion? If so, what can he do? After the combination, Natural Farms ceases to exist. MMC is the surviving firm. What type of combination is this?

Accepted Answer

The answer of Marble Meats Corporation (MMC) proposes to combine...

Question 20

A self-tender is usually made by shareholders attempting to sell their stock to other shareholders.

Accepted Answer

A) True 
 B)False

Exam 40: Corporationsmerger, Consolidation, Termination

Refer to Fact Pattern 40-2A. Royal Oil assumes

Once formed, a corporation cannot be dissolved voluntarily.

Fact Pattern 40-1B Shrimp Boat Company decides to consolidate its operations with Trawlers, Inc., to form Unique Fishers Corporation . -Refer to Fact Pattern 40-1B. Trawlers had rights in certain property. Af?ter the consolidation, UFC acquires the rights

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

Realty Credit Company and Second Mortgage Corporation plan to con?solidate. Most likely, the articles of consolidation will be filed with

Shareholder approval is required when a corporation sells all of its as?sets to an?other company.

Like other corporations, Beauty Supplies Corporation can extend its operations through

The main difference between a consolidation and a merger is that after a consolidation there are at least two surviving corporations.

Mall Stores Corporation owns 95 percent of the shares of Niche Retail Corporation. Through a certain transaction, Mall Stores combines with Niche Retail, but only Mall Stores continues to exist. This is

Winding up a corporation's affairs can only be performed under court supervision.

Motor Parts Corporation offers to buy the stock of NASCAR Products Corporation (NPC) . NPC's directors oppose the offer. Orin and other NPC shareholders file a suit, alleging a breach of the directors' fiduciary duties. Most likely, the court will

Jen files a suit against Kopper Kettle Company. While the suit is pending, Kopper Kettle merges with Luminous Pans, Inc., with Luminous absorbing Kopper Kettle. Now, liability in the suit, if any, rests with

After a consolidation, there are two or more surviving corporations.

After a merger, the surviving corporation inherits all of the disappearing corporation's preexisting rights.

A self-tender is usually made by shareholders attempting to sell their stock to other shareholders.