Deck 47: Corporate Expansion, State and Federal Regulation of Foreign Corporations, and Corporate Dissolution

Question 1

The major constitutional limitation on long-arm statutes is the Due Process Clause.

Answer 1

True

Question 2

A company incorporated outside the state in which it is doing business is known as a foreign incorporation.

Answer 2

True

Question 3

States may end a corporation's existence for certain reasons, even if the Articles of Incorporation specify that the duration of the corporation is "perpetual."

Answer 3

True

Question 4

In a(n) _____ , the acquired company goes out of existence by being absorbed into the acquiring company.

A) merger
B) takeover
C) divestiture
D) consolidation
E) codicil

Question 5

An asset purchase is a type of corporate expansion strategy.

Question 6

A takeover requires an affirmative vote by the target company's board of directors.

Question 7

It is necessary for a foreign corporation to maintain a registered office with a registered agent who works in state where the corporation is doing business.

Question 8

Dissolution of a corporation is the same as corporate death.

Question 9

In a merger, the acquired company goes out of existence by being absorbed into the acquiring company.

Question 10

In order to completely acquire Write Well Inc., Delta Inc. paid the shareholders of Write Well Inc. money in exchange for their shares. This is an example of a _____.

A) freeze-out merger
B) non cash merger
C) horizontal divestiture
D) leveraged buyout
E) vertical divestiture

Question 11

A corporation that goes bankrupt ceases to exist legally.

Question 12

Even when a tender offer has not been made, the Williams Act requires any person who acquires more than 5 percent ownership of a corporation to file a statement with the Securities and Exchange Commission (SEC) within ten days.

Question 13

"Liquidation" is the same as involuntary dissolution.

Question 14

A company purchasing assets of another company will be held strictly liable for any claims by plaintiffs made with regard to those assets.

Question 15

A consolidation between two firms differs from a merger between two firms in that the consolidation between two firms:

A) is a backward vertical expansion strategy.
B) is a forward vertical expansion strategy.
C) leads to the formation of a new corporation.
D) leads to an entity free from successor's liability.
E) is a horizontal integration strategy.

Question 16

Purchasers of corporate assets can avoid successor liability.

Question 17

The tender offer is an invitation to shareholders to sell their shares at a stipulated price.

Question 18

Successor's liability has the least adverse effect on a(n) ____.

A) cash merger
B) takeover
C) consolidation
D) asset purchase
E) noncash merger

Question 19

Which of the following expansion strategies results in the formation of an entity that is an entirely new corporation?

A) A cash merger
B) A takeover
C) A consolidation
D) An asset purchase
E) A noncash merger

Question 20

As an alternative to dissolution, a corporation in financial trouble may look to state blue sky laws for relief.

Question 21

A state action to dissolve a corporation is known as _____

A) voluntary dissolution
B) involuntary dissolution
C) forward vertical integration
D) backward vertical integration
E) amalgamation

Question 22

In a(n)_____, the acquiring company appeals directly to the target's shareholders, offering either money or other securities, often at a premium over market value, in exchange for their shares.

A) merger
B) takeover
C) consolidation
D) asset purchase
E) codicil

Question 23

Dissolution differs from liquidation in that dissolution is:

A) the end of the legal existence of a corporation.
B) the end of the physical existence of a corporation.
C) the distribution of a corporation's assets.
D) the distribution of a corporation's liabilities.
E) a process independent from the judicial system.

Question 24

_____ is the process of paying the creditors and distributing the assets of a corporation.

A) Dissolution
B) Vertical integration
C) Amalgamation
D) Liquidation
E) Horizontal integration

Question 25

Under Sections 14.06 and 14.07 of the Revised Model Business Corporation Act, a dissolved corporation:

A) endures despite the vicissitudes of the economy or the corporation's internal affairs.
B) is a company incorporated outside the state in which it is doing business.
C) purchases an asset in the form of a leveraged buyout.
D) must provide written notice of the dissolution to its creditors.
E) it can merge with the target company the so-called short-form merger.

Question 26

Ending the legal existence of a corporation by unanimous written consent of its shareholders is known as _____.

A) voluntary dissolution
B) involuntary dissolution
C) forward vertical integration
D) backward vertical integration
E) amalgamation

Question 27

If one company acquires 90 percent or more of the stock of another company, it can merge with the target company without the consent of the target company's shareholders. The resultant merger is known as the _____ merger

A) ademption
B) runaway shop
C) codicil
D) short-form
E) closed shop

Question 28

A company may purchase some of the assets of another corporation. Which of the following are true?

A) Shareholders must vote on any acquisition of more than 33% of corporate assets by another corporation.
B) Shareholders must vote on any acquisition of more than 66% of corporate assets by another corporation.
C) The acquiring company can choose which assets it wishes to purchase, subject to no statutory restrictions, but can only purchase assets the other company wishes to sell.
D) b and c
E) After selling more than 50% of its assets, the selling company ceases to exist legally.

Question 29

Differentiate between a merger and a takeover.

Question 30

_____ is the end of the legal existence of a corporation.

A) Dissolution
B) Liquidation
C) Integration
D) Arson effect
E) Allongement

Question 31

Give examples of a few activities that do not fall within the definition of transacting business and may be carried on even if the foreign corporation has not obtained a certificate of authority.

Question 32

Foreign corporations are required to obtain from the secretary of the state a(n) _____ to conduct business.

A) memorandum of association
B) certificate of authority
C) article of incorporation
D) no-objection certificate
E) notice of existence