Deck 29: Corporate Acquisitions and Multinational Corporations

Question 1

Management or any other party soliciting proxies from shareholders must prepare a proxy statement that fully describes the matter for which the proxy is being solicited,who is soliciting the proxy,and any other pertinent information.

Answer 1

True

Question 2

A merger occurs when one corporation is absorbed into another corporation and one corporation survives and the other corporation ceases to exist.

Answer 2

True

Question 3

A shareholder may submit issues for a vote to other shareholders only if corporate management does not oppose such action.

Answer 3

False

Question 4

Even if management is not in favor of the resolution,so long as the shareholder has a right to raise a shareholder's resolution,management must include the shareholder's resolution in the corporation's proxy materials.

Question 5

Corporate shareholders have the right to vote on the election of directors,mergers,and charter amendments.

Question 6

In a merger,the corporation that continues to exist is called the merged corporation.

Question 7

In a merger,title to property owned by the merged corporation transfers to the surviving corporation,without formality or deeds.

Question 8

The Securities Act of 1934 authorized the Securities and Exchange Commission to regulate the solicitation of proxies.

Question 9

In a merger,the shareholders of the merged corporation receive stock or securities of the surviving corporation,or other consideration as provided in the plan of merger.

Question 10

In order to act as a proxy,one must be an officer or director of the corporation

Question 11

The proxy holder is often a director or an officer of the corporation.

Question 12

A shareholder may submit a resolution to be considered by other shareholders if the shareholder owned at least one thousand shares of the corporation's stock for at least two years,and the resolution does not exceed five hundred and fifty words.

Question 13

The United States Treasury Department administers and enforces laws pertaining to proxies and proxy contests.

Question 14

In a merger,the shareholders of the merged corporation always receive stock of the surviving corporation.

Question 15

In a merger,the corporation which ceases to exist is called the dissolved corporation.

Question 16

A proxy always grants the holder of the proxy the right to vote as the holder of the proxy desires.

Question 17

Section 1(a)of the Securities Exchange Act of 1934 is an antifraud provision that prohibits material misrepresentations or omissions of a material fact in the proxy materials.

Question 18

In a merger,the surviving corporation gains all the rights,privileges,powers,duties,obligations,and liabilities of the merged corporation.

Question 19

A copy of the proxy and the proxy statement must be filed with the Securities and Exchange Commission at least sixty days before the materials are sent to the shareholders.

Question 20

If a group desires to solicit proxies to oppose a management action,management has the choice of mailing the proxy materials for the dissenting group,or providing the dissenting group with a list of shareholders.

Question 21

In a short-form merger,neither the approval of the shareholders of either corporation nor the approval of the board of directors of the subsidiary corporation is needed.

Question 22

To make a tender offer,the tender offeror's board of directors must approve the offer.

Question 23

To obtain appraisal rights,a dissenting shareholder must deliver written notice of his or her intent to demand payment of his or her shares to the corporation before the vote is taken,and not vote his or her shares in favor of the proposed action.

Question 24

In a tender offer,the tendering corporation and the target corporation retain their separate legal status.

Question 25

After a share exchange,one corporation (the principal corporation)owns all the shares of the other corporation (the agent corporation).

Question 26

Hostile tender offers can be made without any prior attempt by a tender offeror to acquire the target company through a voluntary merger or purchase.

Question 27

The dissenting shareholder appraisal right allows a shareholder to request appraisal of the shares to be acquired in a merger,and the tender offer price will be adjusted based on the appraisal.

Question 28

A short-form merger procedure is simpler than an ordinary merger.

Question 29

If the parent corporation owns 51 percent or more of the outstanding shares of the subsidiary corporation,a short-form merger procedure may be followed to merge the two corporations.

Question 30

A corporate sale or lease of its assets requires the recommendation of the board of directors and an affirmative vote of the majority of the shares of the selling or leasing corporation that are entitled to vote (unless greater vote is required).

Question 31

If the board of directors of a target corporation does not agree to a merger or an acquisition,the acquiring corporation can make a tender offer for the shares directly to the shareholders of the target corporation.

Question 32

A short-form merger is a simplified form of merger that can be used so long as the number of voting shares outstanding of the surviving corporation increases by less than twenty percent.

Question 33

A corporation must notify shareholders of the existence of their appraisal rights before a transaction can be voted on.

Question 34

Share exchanges are often used to create holding company arrangements.

Question 35

A shareholder loses the ability to exercise the appraisal right by voting in favor of the proposed action.

Question 36

A shareholder exercising his or her appraisal right can have the corporation petition the court to determine the value of shares,if the shareholder believes that the corporation has set the value too low.

Question 37

In a share exchange,both corporations continue their separate legal existence.

Question 38

One corporation can acquire all the shares of another corporation through a share default.

Question 39

A tender offer can be made for all or a portion of the shares of the target corporation.

Question 40

Ordinarily,a merger requires the approval of both boards of directors and the shareholders of both corporations.

Question 41

The legality of defensive strategies in fighting a hostile takeover is examined using the "business judgment" rule.

Question 42

The Williams Act provides for both civil and criminal penalties for violation.

Question 43

A "poison pill" refers to a target company in a hostile takeover selling off valuable pieces of itself to make itself less attractive to the potential buyer.

Question 44

A "silver parachute" references large severance payments received by top executives when they leave their employment at a corporation.

Question 45

Any state regulation of hostile takeovers is unconstitutional under the commerce clause of the United States Constitution.

Question 46

The fair price rule as applied to tender offers provides that any increases in price paid for shares tendered must be offered to all shareholders,even those who have previously tendered their shares.

Question 47

The Williams Act requires a tender offeror to disclose detailed information regarding the term,conditions,and other information concerning the tender offer at the time the offer is made.

Question 48

Prior to 1998,tender offers were not federally regulated.

Question 49

The Williams Act requires a tender offeror to notify either the management of the target company or the SEC before the offer is made.

Question 50

According to the Williams Act,the "fair price" rule stipulates that tendered shares must be purchased on a pro rata basis if too many shares are tendered.

Question 51

When a target corporation buys back stock at a premium over fair market value,the payment is called "greenmail."

Question 52

According to the Williams Act,the tender offer must be extended for ten (10)business days if the tender offeror increases the number of shares it will take or the price it will pay for the shares.

Question 53

In opposing a tender offer,adopting a poison pill involves issuing defamatory statements about the company.

Question 54

According to the Williams Act,the tender offer cannot be closed before twenty (20)business days after the commencement of the tender offer.

Question 55

The board of directors has a fiduciary duty to shareholders in taking action relative to a hostile takeover.

Question 56

State antitakeover statutes are designed to protect domestic corporations,but not foreign corporations,doing business in the state.

Question 57

A successful tender offer between two corporations cannot be followed by a merger of the two corporations.

Question 58

Creating an employee stock ownership plan to fight a tender offer is illegal under the Smith Act.

Question 59

The Smith Act specifically regulates all tender offers,whether they are made with securities,cash,or other consideration,and it establishes certain disclosure requirements and antifraud provisions.

Question 60

The Williams Act does not regulate the length of time that a tender offer must remain open.

Question 61

Which of the following best describes a proxy contest?

A) Opposing factions of shareholders seek different prices for their shares.
B) Opposing factions of shareholders seek proxies, so they can vote other shareholders' shares on a matter.
C) Members of the board of directors seek the support of other board members on a matter to be voted on by the board.
D) Opposing factions of shareholders seek to influence board members to vote in a certain way on a matter before the board of directors.
E) Opposing factions of shareholders seek to influence officers to disregard the board of directors.

Question 62

The purpose of a proxy is to:

A) allow a shareholder to transfer shares to another.
B) allow a shareholder to place shares in trust.
C) allow a shareholder to assign his or her right to vote.
D) allow a shareholder to assign his or her dividends to another.
E) initiate a tender offer.

Question 63

A corporation is not liable for torts committed by personnel of a branch office.

Question 64

If management desires to solicit proxies from shareholders,it must:

A) file the proposed proxy, proxy statement and other solicitation material with the Securities and Exchange Commission, and obtain SEC approval at the same time that the materials are sent to shareholders.
B) file the proposed proxy, proxy statement and other solicitation material with the Securities and Exchange Commission at least thirty days in advance of the time that the materials are sent to shareholders.
C) file the proposed proxy, proxy statement, and other solicitation material with the Securities and Exchange Commission at least ten days in advance of the time that the materials are sent to shareholders.
D) file the proposed proxy, proxy statement, and other solicitation material with the Securities and Exchange Commission at least ten days in advance of the time materials are sent to shareholders, but only if financial statements will be distributed.
E) not file anything with the Securities and Exchange Commission, unless the SEC receives complaints about the materials that are distributed.

Question 65

State antitakeover statutes are usually enacted to protect local state businesses from being taken over by other businesses,particularly out-of-state businesses,which might close certain plants located in the state,move certain business operations out of state,lay off employees who are residents of the state,and cause a decrease in tax revenues of the state.

Question 66

A shareholder's proxy can be granted to:

A) other shareholders.
B) officers.
C) officers or directors.
D) any shareholder who is also an officer or director.
E) anyone.

Question 67

Which of the following is not a possible consequence of including fraudulent information in a proxy solicitation?

A) a criminal action initiated by the justice department
B) fines imposed on shareholders who granted proxies
C) a civil action by the Securities and Exchange Commission
D) an order requiring a new election on the matter for which proxies were sought
E) a suit by an injured shareholder for damages from the wrongdoer

Question 68

Many state antitakeover statutes cover corporations that have their principal office in the state,have a certain percentage of its shareholders who are residents of the state,or have residents of the state who own a certain percentage of the corporation's stock.

Question 69

Over one-half of the largest corporations in the United States have their articles of incorporation filed in the state of Delaware.

Question 70

A proxy statement must include information about what?

A) who is soliciting the proxy, and the matter for which the proxy is being solicited
B) who is soliciting the proxy, and the estimated likelihood that the matter will be approved
C) who is soliciting the proxy, and the number of proxies already executed on the matter
D) who is soliciting the proxy, and pro forma financial statements, assuming that the matter for which the proxy is sought is approved
E) the matter for which the proxy is being solicited, and the estimated likelihood that the matter will be approved

Question 71

Some antitakeover statutes have been challenged as being unconstitutional for allegedly violating the Fifth Amendment to the United States Constitution.

Question 72

Solicitation of proxies is regulated under the:

A) Securities Act of 1933.
B) Securities Exchange Act of 1934.
C) Williams Act.
D) Proxy Solicitation Act of 1968.
E) Uniform Commercial Code.

Question 73

State antitakeover statutes apply to corporations that are incorporated in the state.

Question 74

Delaware's legislature has provided a potent antitakeover statute in its corporation code.

Question 75

A parent corporation is not liable for contracts or torts committed by a foreign subsidiary,other than its capital contribution to the subsidiary.

Question 76

In order for a proxy to become valid,the shareholder must:

A) complete a written proxy statement, and file it with the Securities and Exchange Commission.
B) complete a written proxy statement, file it with the Securities and Exchange Commission, and receive the appropriate approval from the SEC.
C) complete a written proxy statement, and deliver it to the proxy holder.
D) complete a written proxy statement, and deliver it to the corporation.
E) reach agreement with the proxy holder, but no written statement is required.

Question 77

A corporation can conduct business in a foreign country using either a branch office or a subsidiary corporation.

Question 78

The Delaware antitakeover statute provides that an acquirer of a Delaware corporation cannot complete a merger with the acquired corporation for one (1)year after purchasing fifteen (15)percent or more of the Delaware corporation's shares.

Question 79

When a party wants to make a proxy solicitation of shareholders in a publicly-held corporation,what must occur following the filing of the proxy materials with the Securities and Exchange Commission?

A) Before sending out the proxy solicitation, that party must wait until receiving the appropriate Securities and Exchange Commission approval of the solicitation materials.
B) The Securities and Exchange Commission will prepare a statement of its position on the matter connected with the proxy solicitation, and this must be sent out along with the proxy solicitation materials.
C) The Securities and Exchange Commission will make the solicitation public, and allow a public comment period.
D) A period of ten days must pass, during which time the Securities and Exchange Commission can notify the party soliciting proxies that additional disclosures are needed.
E) After a period of ten days has passed, the party must seek permission from the Securities and Exchange Commission to send out the solicitation materials.

Question 80

A multinational corporation is also referred to as a transnational corporation.