Deck 40: Corporationsmerger, Consolidation, Termination

Question 1

In a short-form merger, neither corporation's shareholders need to approve the merger.

Answer 1

True

Question 2

Shareholder appraisal rights are normally available in sales of sub?stan?tially all corporate assets not in the ordinary course of business.

Answer 2

True

Question 3

In a merger, the articles of incorporation of the surviving corporation are deemed not to include any changes that are stated in the articles of merger.

Answer 3

False

Question 4

After a consolidation, the new corporation inherits all of the consolidat?ing corporations' rights.

Question 5

In a merger, only a surviving corporation's shareholders are enti?tled to ap?praisal rights.

Question 6

A merger involves the legal combination of two or more corporations, none of which continue to exist.

Question 7

After a merger, a disappearing corporation's preexisting rights disappear.

Question 8

After a merger, the disappearing corporation retains all of its preexisting obligations.

Question 9

A corporation can extend its operations through a consolidation.

Question 10

In a consolidation, the consolidating corporations become subsidiaries of the new corporation.

Question 11

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

Question 12

After a consolidation, the new corporation inherits all of the consolidat?ing corporations' obligations.

Question 13

After a merger, a surviving corporation's shareholders assume personal liability for a disappearing corporation's preexisting obligations.

Question 14

A short-form merger can be used whenever a parent owns more than 10 percent of the stock of its subsidiary.

Question 15

In most cases, merging corporations' officers and employees do not need to ap?prove the merger.

Question 16

In a share exchange, neither corporation's directors need to approve the exchange.

Question 17

Appraisal rights are often the only recourse for shareholders who object to a parent-subsidiary merger.

Question 18

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

Question 19

In a consolidation, the articles of consolidation become the articles of in?corporation for the new corporation.

Question 20

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

Question 21

When a sale of assets amounts to what in effect is a consolidation, the ac?quiring corporation does not inherit the selling corporation's liabilities.

Question 22

To defend against a takeover attempt, a company can promise to give its sharehold?ers the right to buy additional shares at low prices.

Question 23

Under shareholder appraisal rights, the shareholder and the corporation must agree on the shares' fair value or a court will determine it.

Question 24

Selling all of a corporation's assets requires the approval of the state.

Question 25

Generally, a corporation must notify its shareholders that appraisal rights are available.

Question 26

A court can dissolve a corporation for mismanagement.

Question 27

The "fair value" of shares under appraisal rights is the mid-point between what a corporation is willing to pay and a shareholder is willing to accept.

Question 28

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

Question 29

Shareholder approval is required when a corporation buys all of the as?sets of an?other company.

Question 30

The board of directors of a targeted corporation must approve a tender of?fer before its shareholders can accept it.

Question 31

Only a board of directors can initiate the dissolution of a corporation.

Question 32

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

Question 33

Dissolution is a method by which a corporation can extend its operations.

Question 34

Once formed, a corporation cannot be dissolved voluntarily.

Question 35

Liability based on the conduct of a selling corporation cannot be imposed on a buying corpo?ration that acquires the seller's assets.

Question 36

Once formed, a corporation cannot be dissolved involuntarily.

Question 37

A company may not defend against a takeover attempt by issuing additional stock.

Question 38

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

Question 39

Due to the potential consequences of a takeover attempt, the business judgment rule does not apply.

Question 40

When a sale of assets amounts to what in effect is a merger, the acquir?ing corporation inherits the selling corporation's liabilities.

Question 41

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

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 assets that Petro and Quality acquired after a combina?tion was proposed.

Question 42

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

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 43

Eagle Financial Corporation merges with First Bank Corporation, with Eagle Financial absorbing First Bank. After the merger

A) a different, new corporation is the surviving corporation.
B) Eagle Financial and First Bank are both surviving corporations.
C) Eagle Financial is the surviving corporation.
D) First Bank is the surviving corporation.

Question 44

Candy Corporation has a right of action against Dina. Candy merges with Eats, Inc., with Eats absorbing Candy. After the merger, Candy's right of action against Dina can be exercised by

A) Candy.
B) Dina.
C) Eats.
D) no one.

Question 45

Office Company and Kappa Company wish to combine all assets, stock, and personnel into a new firm to be called OK Corporation. This is

A) a consolidation.
B) a merger.
C) an exchange of assets.
D) a takeover.

Question 46

Fact Pattern 40-1A
Cherry Grove Apartments, Inc., merges with Dutch Elm Realty, Inc. Only Dutch Elm remains.
Refer to Fact Pattern 40-1A. The terms of the merger agreement differ from Dutch Elm's articles of incor?poration. The articles

A) are deemed amended to include the differences.
B) are replaced by the merger agreement.
C) effectively prevent the merger.
D) prevail.

Question 47

A merger between Frosted Confections, Inc., and Great Brewing Company can be expressed as Frosted Confections + Great Brewing =

A) Frosted Confections.
B) Hot Coffee Corporation.
C) Hot Coffee Corporation + Iced Pastries Corporation.
D) Iced Pastries Corporation.

Question 48

Vacation Destination, Inc., and Wonder Resort Corporation plan to merge. Most likely, the ar?ticles of merger will be filed with

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 49

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

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

Question 50

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. The terms of the consolidation agreement dif?fer from Shrimp Boat's articles of incor?poration. The articles

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

Question 51

Fact Pattern 40-1A
Cherry Grove Apartments, Inc., merges with Dutch Elm Realty, Inc. Only Dutch Elm remains.
Refer to Fact Pattern 40-1A. Cherry Grove held rights in certain real property. After the merger, Dutch Elm acquires the rights

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

Question 52

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

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

Question 53

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

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 54

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 owed money to View Harbor Storage and other creditors. After the consolidation, UFC must pay

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

Question 55

Fact Pattern 40-1A
Cherry Grove Apartments, Inc., merges with Dutch Elm Realty, Inc. Only Dutch Elm remains.
Refer to Fact Pattern 40-1A. Cherry Grove owed money to Eager Beaver Repair Service and other creditors. Af?ter the merger, Dutch Elm must pay

A) all of Cherry Grove's debts.
B) half of Cherry Grove's debts.
C) none of Cherry Grove's debts.
D) only debts that Cherry Grove incurred after a merger was proposed.

Question 56

Like other corporations, Workday Personnel Corporation can expand its operations through

A) a liquidation and distribution of its assets.
B) an acquisition of a controlling interest in another corporation.
C) articles of dissolution filed voluntarily with the state.
D) a purchase of raw materials to be converted into finished goods.

Question 57

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

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

Question 58

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

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 59

Steel Tool Corporation and Thrifty Hardware Company combine so that all that remains after the papers have been signed is Steel Tool. This is

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

Question 60

Refer to Fact Pattern 40-2A. The formation of Royal Oil is

A) a consolidation.
B) a dissolution.
C) a liquidation.
D) a merger.

Question 61

Ewa is a shareholder of Fresh Produce, Inc., whose management is con?sider?ing a tender offer by Green Grocery Stores Corporation. Eve elects to exer?cise her appraisal rights. In some jurisdictions, now Eve can

A) not participate in shareholder votes but can receive dividends.
B) not participate in shareholder votes or receive dividends.
C) not receive dividends but can participate in shareholder votes.
D) still participate in shareholder votes and receive dividends.

Question 62

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

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

Question 63

Fact Pattern 40-2B
Mega Corporation wants to gain control of MiniCo, Inc. The companies negoti?ate for several months, without coming to terms. Mega decides to pursue a takeover at?tempt. MiniCo decides to resist.
Refer to Fact Pattern 40-2B. MiniCo solicits a merger with NuNation Corporation, a third party, which makes a better offer to MiniCo's share?holders. NuNation is a

A) crown jewel.
B) Pac-Man.
C) poison pill.
D) white knight.

Question 64

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

A) automatically responsible.
B) not responsible under any circumstances.
C) responsible if Heavy Hydraulics is a competitor of Giant Lift.
D) responsible if the sale is actually a merger or consolidation.

Question 65

Firelite Corporation wants to purchase all of the assets of Glo Power Products, Inc. Hadji is an Firelite shareholder. The approval of Hadji and other Firelite shareholders is necessary

A) in all circumstances.
B) in no circumstances.
C) only if Firelite plans to pay with unauthorized, unissued stock.
D) only if the purchase extends Firelite's control over more assets.

Question 66

Standard Business Corporation can be compelled to dissolve by

A) its creditors only.
B) itself, through its shareholders and directors, only.
C) itself, through its shareholders and directors, or the state.
D) the state only.

Question 67

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

A) Precise and Quality's directors.
B) Precise and Quality's officers and employees.
C) Precise's shareholders.
D) Quality's shareholders.

Question 68

The term for the legal death of the artificial "person" of Equity Investments, Inc., or any other corporation, is

A) consolidation.
B) dissolution.
C) merger.
D) winding up.

Question 69

Fact Pattern 40-2B
Mega Corporation wants to gain control of MiniCo, Inc. The companies negoti?ate for several months, without coming to terms. Mega decides to pursue a takeover at?tempt. MiniCo decides to resist.
Refer to Fact Pattern 40-2B. MiniCo issues shares that its shareholders can exchange for cash if a takeover is successful, intending to make Mega's takeover attempt too expensive. This is a

A) crown jewel defense.
B) Pac-Man defense.
C) poison pill defense.
D) white knight defense.

Question 70

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

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 71

Pink Boutique Company and Purple Kiosk Company decide to consolidate. This corporate combination does not require the approval of

A) Pink and Purple's directors.
B) Pink and Purple's officers and employees.
C) Pink's shareholders.
D) Purple's shareholders.

Question 72

Unified Industries, Inc., increases its holdings, making ten?der of?fers in many states. These offers are subject to

A) federal securities regulations only.
B) in all states, state securities regulations only.
C) in certain states, only state securities regulations.
D) in most states, state and federal securities regulations.

Question 73

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

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 74

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

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 75

Nina is a dissenting shareholder of Olive Oil Company whose management is consid?ering a tender offer by Pure Foods, Inc. Nina and Olive Oil cannot agree on the fair value of the stock. The value will be determined by

A) a court.
B) Nina.
C) Olive Oil.
D) Pure Foods.

Question 76

Vision Optical Company and Wide Eyes Open, Inc. decide to combine. Xavier, a Wide Eyes shareholder, is dissatisfied with the price that he will receive for his stock. In the absence of fraud or other illegal conduct, Xavier'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) urge other shareholders to insist on a higher price.

Question 77

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

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

Question 78

Ruff Games, Inc., wishes to ac?quire a controlling interest in Smart Toy Com?pany by buying its stock. A public offer by Ruff Games to Smart Toy share?holders is

A) a buyout notice.
B) a golden parachute.
C) an acquisition call.
D) a tender offer.

Question 79

Java Corporation wants to purchase all of the assets of Kaffee Corporation. Loni is a Kaffee shareholder. The approval of Loni and other Kaffee shareholders is necessary

A) in all circumstances.
B) in no circumstances.
C) only if Kaffee will be paid with unauthorized, unissued stock.
D) only if Java assumes Kaffee's liabilities as part of the deal.

Question 80

Salt Corporation wants to acquire or merge with Pepper Corporation. The board and the share?holders of Pepper are resisting. Salt should

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