Question 1

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

Accepted Answer

The articles of consolidation, which outline the terms of the consolidation, are typically filed with the state's secretary of state.

Question 2

Raven is a shareholder of Quantum Mechanix Corporation.Raven could normally ex-er-cise appraisal rights if Quantum participated in

Accepted Answer

Appraisal rights are typically available to shareholders in the event of significant changes to the corporation, such as mergers or consolidations, where shareholders may dissent and seek a fair value for their shares.

Question 3

Sangfroid Business Corporation can be compelled to dissolve by

Accepted Answer

Sangfroid Business Corporation can be compelled to dissolve by itself, through its shareholders and directors, or the state. In most jurisdictions, a company can be dissolved voluntarily by its members or involuntarily by the state if it violates certain regulations or fails to comply with legal requirements. Additionally, in some cases, creditors may be able to petition for the involuntary dissolution of a company if they have substantial claims against it. Therefore, all three options presented in choice C are valid ways in which Sangfroid Business Corporation could be compelled to dissolve.

Question 4

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

Accepted Answer

This transaction is a short-form merger as Mall Stores already owns more than 90% of the outstanding shares of Niche Retail Corporation. As a result, the merger can be completed without a vote from Niche Retail's shareholders.

Question 5

Giant Lift Corporation purchases all of the assets of Heavy Hydraulics Corporation.With respect to Heavy Hydraulics's liabilities,Giant Lift is

Accepted Answer

Giant Lift Corporation would be responsible for Heavy Hydraulics's liabilities if the asset purchase is considered a de facto merger or consolidation, as this would imply continuity of the business and obligations.

Question 6

Brock is a shareholder of Competent Homebuilders Corporation (CHC).For the last few years,business has not been profitable for CHC.The firm has lost money on its operations.There has been some profit through sales of company assets,but the board of directors has refused to declare a dividend.This last year,the firm's accountants failed to file fed-eral in-come tax returns and the board refused to pay the tax.Brock takes a close look at the firm and protests to the board,in particular over the fail-ure to declare a dividend,but the board ignores the complaint.Which of these events,if any,would form a ground for a court to order the dissolu-tion of CHC,on Brock's petition? If the court denies the petition,could Brock and the other shareholders dissolve CHC?

Accepted Answer

The answer of Brock is a shareholder of Competent Homebuilders...

Question 7

Corporate Properties,Inc.,attempts to acquire a substantial number of the shares of Downtown Investment Corporation through a public offer to Downtown's shareholders.This is

Accepted Answer

This situation describes a tender offer, which is a public offer made by one company to purchase a substantial number of shares from another company's shareholders. This differs from a consolidation, which involves the merger of two companies into a new entity, and a short-form merger, which is a merger without a shareholder vote. A termination is also unrelated to this scenario.

Question 8

Starr Cardio,Inc.,is a small business.Ted,Uma,and eleven other members of the Starr family own all of its stock.Currently,Starr's income is taxed at the corporate level and,after being distributed to the family members,at the shareholder level.Can Starr retain its corporate status but oth-er-wise avoid this double taxation? If so,how?

Accepted Answer

The answer of Starr Cardio,Inc.,is a small business.Ted,Uma,and eleven other...

Question 9

Ruff Games,Inc.,wishes to ac-quire a controlling interest in Smart Toy Com-pany by buying its stock.Smart Toy is

Accepted Answer

Smart Toy Company is the target corporation as Ruff Games, Inc. wishes to acquire a controlling interest in its stock.

Question 10

Precise Device Corporation and Quality Instruments,Inc.,decide to merge.This corporate combination does not require the approval of

Accepted Answer

The answer of Precise Device Corporation and Quality Instruments,Inc.,decide to...

Question 11

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

When two companies merge, the acquiring company (in this case, Luminous Pans) generally assumes the liabilities of the acquired company (Kopper Kettle). Therefore, liability in the suit would now rest with Luminous.

Question 12

Salt Corporation wants to acquire or merge with Pepper Corporation.Salt should

Accepted Answer

Making a tender offer to the shareholders of Pepper is the best option for Salt Corporation to acquire or merge with Pepper Corporation. This will give Salt the opportunity to directly communicate with the shareholders of Pepper and allow them to individually decide whether to sell their shares or not. Filing a plan of merger with the Secretary of State is not necessary unless the transaction involves a merger between Salt and a third party. Filing an article of merger with Pepper is also not necessary as it is only applicable when Pepper agrees to the merger. Making a tender offer to the shareholders of Salt is not relevant in this situation.

Quiz 24: Corporate Formation, financing, and Termination