Deck 35: Corporate Mergers, takeovers, and Termination

Question 1

A short-form merger requires the approval of the shareholders of both corporations.

Answer 1

False

Question 2

In a share exchange,some or all of the shares of one corporation are exchanged for the shares of another,and both corporations cease to exist.

Answer 2

True

Question 3

In a merger,the surviving corporation inherits the disappearing corporation's rights.

Answer 3

True

Question 4

State law establishes the procedures for asserting appraisal rights.

Question 5

A merger involves the legal combination of two or more corporations,after which both continue to exist.

Question 6

In a consolidation,two or more corporations combine in such a way that each corporation ceases to exist.

Question 7

A corporation that is acquiring all or substantially all of the assets of another corporation by direct purchase must obtain shareholder approval for the purchase.

Question 8

Whether a combination is a merger,a consolidation,or a share exchange the rights and liabilities of shareholders,the corporation,and the corporation's creditors are not the same.

Question 9

A short-form merger is the legal combination of two or more corporations online.

Question 10

The results of a consolidation are the same as those of a merger.

Question 11

Federal law establishes the specific procedures for a share exchange.

Question 12

Appraisal rights extend to mergers and consolidations.

Question 13

The board of directors of each corporation involved must approve a merger.

Question 14

Whether a combination is merger or a consolidation,the rights and liabilities of the shareholders are the same.

Question 15

The shareholder's appraisal right does not extend to share exchanges and sales of substantially all of the corporate assets.

Question 16

In a share exchange,one corporation will issue shares or pay some fair consideration to the shareholders of another corporation that will then cease to exist.

Question 17

The majority of the shareholders of each corporation must vote to approve a plan of merger.

Question 18

The officers and other employees of each corporation involved must approve a merger or share exchange plan.

Question 19

The shareholder's appraisal right extends to mergers and consolidations.

Question 20

A merger involves the legal combination of one or more corporations in such a way that only one of the corporations continues to exist.

Question 21

An acquiring corporation deals directly with a target corporation's management in seeking to purchase the target's stock by making a tender offer.

Question 22

A corporation's creditors want to be notified when the firm is dissolved so that they can make a tender offer.

Question 23

A target corporation is a corporation being acquired through the purchase of a substantial number of the voting shares of its stock.

Question 24

Generally,a corporation that purchases the assets of another corporation is not automatically responsible for the liabilities of the selling corporation.

Question 25

To resist a takeover,a target company may make a self-tender.

Question 26

Grandview Office Suites,Inc.,merges with Hilltop Commercial Properties,Inc. Only Hilltop remains.
Grandview owed money to Innovative Décor,Inc.,and other creditors. After the merger,Hilltop must pay

A)all of Grandview's debts.
B)half of Grandview's debts.
C)none of Grandview's debts unless there is a formal transfer of liability.
D)only debts that Grandview incurred after a merger was proposed.

Question 27

When a corporation is dissolved voluntarily,the corporation does not need to file articles of dissolution with the state.

Question 28

Generally,a corporation that purchases the assets of another corporation is automatically responsible for the liabilities of the selling corporation.

Question 29

A target corporation's attempted takeover of an acquiring corporation is referred to as the poison pill defense.

Question 30

Grandview Office Suites,Inc.,merges with Hilltop Commercial Properties,Inc. Only Hilltop remains.
Grandview held rights in certain real property. After the merger,Hilltop acquires the rights

A)automatically.
B)only after completing certain additional statutory procedures.
C)only Grandview's former shareholders expressly approve.
D)only after a required formal transfer.

Question 31

When dissolution takes place by voluntary action,the members of the board of directors are responsible for winding up the affairs of the corporation.

Question 32

When deciding which form of business organization to choose,businesspersons normally consider only one factor.

Question 33

The state cannot dissolve a corporation under any circumstances.

Question 34

When a corporation is dissolved voluntarily,its assets can be liquidated without notice to its creditors.

Question 35

A court can dissolve a corporation for committing fraud or misrepresentation.

Question 36

Like other corporations,Supra Market Corporation can extend its operations through

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

Question 37

Natural Laminate Corporation and Oak Wood Flooring Company combine so that all that remains after the papers have been signed is Natural Laminate. This is

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

Question 38

Dissolution is the legal death of the artificial "person" of a corporation.

Question 39

The articles of merger include changes that differ from Hilltop's articles of incorporation. The articles of incorporation

A)are deemed amended to include the changes.
B)are replaced by the articles of merger.
C)effectively prevent the merger.
D)preempt the articles of merge.

Question 40

There is only one way that a firm may respond to a takeover attempt.

Question 41

Like other corporations,Restwell Hotels Inc. can extend its operations through

A)liquidating and distributing its assets.
B)buying the assets of,or a controlling interest in,another corporation.
C)filing articles of dissolution with the state.
D)appointing a receiver to wind up the corporate affairs.

Question 42

A merger between Blended Coffee Corporation and Cowland Creamery Inc. can be expressed as Blended Coffee + Cowland Creamery =

A)Cowland Creamery.
B)Delite Dairy Corporation.
C)Delite Dairy Corporation + EZ Stir & Sip Inc.
D)EZ Stir & Sip Inc.

Question 43

Garden Supply Company and Home & Lawn Corporation plan to consolidate. Most likely,the articles of consolidation will be filed with

A)the county recording office.
B)the local retailers' association.
C)the state's secretary of state.
D)the U.S. Department of Commerce.

Question 44

The articles of consolidation differ from Fit-Rite's articles of incorporation. The articles

A)are replaced by Evergrip's articles of incorporation.
B)are replaced by the articles of consolidation.
C)effectively prevent the consolidation.
D)prevail.

Question 45

Ingre is a shareholder of Jazz Street Studios,Inc. Ingre could normally exercise appraisal rights if Jazz Street participated in

A)a share exchange.
B)none of the choices.
C)a takeover.
D)a winding up.

Question 46

DIY Fasteners Company decides to consolidate its operations with Evergrip Studs,Inc.,to form Fit-Rite Bolts & Screws Inc.
Evergrip had rights in certain property. After the consolidation,Fit-Rite acquires the rights

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

Question 47

Through a certain transaction,Coffee Bean Cafés,Inc.,acquires all of the shares of Deli Dining Corporation for some of Coffee Bean's shares. Both Coffee Bean and Deli Dining continue to exist. This is

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

Question 48

United Resources acquires

A)all of Shale's and Tierra's assets.
B)half of Shale's and Tierra's assets.
C)none of Shale's and Tierra's assets unless there is a formal transfer.
D)only assets that Shale and Tierra acquired after a combination was proposed.

Question 49

Beryl is a shareholder of Cotton Clothes,Inc.,whose management is considering extending its operations through some type of combination or acquisition with Denim Jeans Corporation. Beryl could normally exercise appraisal rights if Cotton participates in

A)a sale of substantially all of the corporate assets.
B)a termination.
C)a tender offer.
D)none of the choices.

Question 50

Burst-o'-Flavor Burger Restaurant Corporation merges with Chick-E Chicken Franchise Corporation,with Burst-o'-Flavor absorbing Chick-E Chicken. After the merger

A)a different,new entity is the surviving corporation.
B)Burst-o'-Flavor and Chick-E Chick'n are both surviving corporations.
C)Burst-o'-Flavor is the surviving corporation.
D)Chick-E Chicken is the surviving corporation.

Question 51

Scuba Adventures Inc. and Tours of the Sea Company decide to consolidate. This corporate combination does not require the approval of

A)Scuba and Tours directors.
B)Scuba and Tours officers.
C)Scuba shareholders.
D)Tours shareholders.

Question 52

Ground-Up Construction Corporation has a right of action against Heavyquip,Inc. Ground-Up Construction merges with Investors Development,Inc.,with Investors absorbing Ground-Up. After the merger,Ground-Up's right of action against Heavyquip can be exercised by

A)Ground-Up.
B)Investors.
C)Heavyquip.
D)no one.

Question 53

Lori files a suit against Memphis Studios Inc. While the suit is pending,Memphis Studios consolidates with Nashville Music Corporation to form Opry Productions,Inc. Now,liability in the suit rests with

A)Opry Productions.
B)Memphis Studios and Nashville Music.
C)Lori.
D)no one.

Question 54

Quintessential Recording Corporation and Real Musik Production Company wish to combine all assets,stock,and personnel into a new firm to be called Streaming DigiSongs Inc. This is

A)a consolidation.
B)a merger.
C)a share exchange.
D)a takeover.

Question 55

Omni GPS Corporation owns 95 percent of the shares of Pinpoint App Inc. Through a certain transaction,Online GPS combines with Pinpoint App,but only Omni GPS continues to exist. This is

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

Question 56

Shale Oil Processing Corporation combines its assets and debts with those of Tierra Frakking Company to form United Resources,Inc. Shale and Tierra cease to exist.
The formation of United Resources is

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

Question 57

Ramon is a shareholder of Quantum Mechanix Corporation. Ramon could normally exercise appraisal rights if Quantum participated in

A)a consolidation.
B)a dissolution.
C)a liquidation.
D)none of the choices.

Question 58

United Resources assumes

A)all of Shale's and Tierra's debts.
B)half of Shale's and Tierra's debts.
C)none of Shale's and Tierra's debts unless there is a formal transfer of liability.
D)only debts that Shale and Tierra incurred after a combination was proposed.

Question 59

DIY Fasteners Company decides to consolidate its operations with Evergrip Studs,Inc.,to form Fit-Rite Bolts & Screws Inc.
Evergrip owed money to Guaranty Bank and other creditors. After the consolidation,Fit-Rite must pay

A)all of Evergrip's debts.
B)half of Evergrip's debts.
C)none of Evergrip's debts.
D)only debts that Evergrip incurred after consolidation was proposed.

Question 60

Broncobuster BarBQ Company and Cowpuncher Cuisine,Inc. decide to combine. Deanna,a Cowpuncher shareholder,is dissatisfied with the price that she will receive for her stock. In the absence of fraud or other illegal conduct,Deanna's exclusive remedy is to

A)exercise an appraisal right.
B)file a suit to delay the process.
C)refuse to agree to the deal,which cannot then proceed.
D)acquire stock from the other shareholders and thereby obtain corporate control.

Question 61

Ribeye Restaurants Inc. wants to acquire or merge with SteakHouse Corporation. Ribeye should

A)file a plan of merger with the secretary of state.
B)file an article of merger with SteakHouse.
C)make a tender offer to the SteakHouse shareholders.
D)make a tender offer to the Ribeye shareholders.

Question 62

Doris wants to go into business as eBeats to market a new app. Organizational fees are required to form all of the following business organizations except

A)a sole proprietorship.
B)a corporation.
C)a limited partnership.
D)a limited liability company.

Question 63

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

Question 64

David wants to go into business as Explosive Bursts to make and market fireworks. When deciding which form of business organization would be most appropriate,David would normally take into account all of the following except

A)the liability of the owners.
B)the forms of competitors' business organizations.
C)tax considerations.
D)the need for capital.

Question 65

With respect to Diversified's shareholders,this conduct is most likely

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

Question 66

Mediterranean Herbs Inc. wants to purchase all of the assets of Nature's Spice Company. Approval of the deal must be obtained from the shareholders of

A)Mediterranean Herbs only.
B)Nature's Spice only.
C)both corporations.
D)neither corporation.

Question 67

Investors Holdings,Inc.,attempts to acquire a substantial number of the shares of Jack's Seed Company through a public offer to Jack's shareholders. This is

A)a consolidation.
B)a tender offer.
C)a short-form merger.
D)a dissolution.

Question 68

Alice and Bernie pool their money and talents to form Cutting Edge Corporation,a precision tooling company. They are the firm's only shareholders,directors,and officers. After five years of declining home prices,they decide to cease business. Can they simply dissolve their corporation at will? If so,what are the steps in the process?

Question 69

Brite Cosmetics Corporation purchases all of the assets of Color-All Lipsticks Corporation. With respect to Brite Cosmetics' liabilities,Color-All Lipsticks is

A)automatically responsible.
B)not responsible under any circumstances.
C)responsible if Color-All Lipsticks is a competitor of Bright Cosmetics.
D)responsible if the sale is actually a merger or consolidation.

Question 70

Bagels & Donuts Corporation wants to purchase all of the assets of Coffee & Tea Inc. Dolly is a Coffee & Tea shareholder. The approval of Dolly and other Coffee & Tea shareholders is necessary

A)in all circumstances.
B)in no circumstances.
C)only if Coffee & Tea will be paid with unauthorized,unissued stock.
D)only if Bagels & Donuts agrees to assume Coffee & Tea's liabilities.

Question 71

OnSpec Business Inc. can be compelled to dissolve by

A)any of the choices.
B)its competitors.
C)dissatisfied clients and customers.
D)a court order.

Question 72

Diversified Corporation's articles of incorporation prohibit a sale of its assets without a vote of the board of directors. Diversified's officers sell some assets to Enterprise Company without notice to the board. The officers also fail to pay Diversified's taxes on time,and some Diversified funds are not accounted for.
The appropriate remedy is most likely

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