Question 1

Which of the following best describes a proxy contest?

Accepted Answer

A proxy contest is when opposing factions of shareholders seek proxies or the right to vote on behalf of other shareholders on a matter. They compete for the support of shareholders to attain a majority of votes and influence the outcome of the vote. The other options do not accurately describe a proxy contest.

Question 2

The purpose of a proxy is to:

Accepted Answer

The purpose of a proxy is to allow a shareholder to assign his or her right to vote to someone else. This can be useful if the shareholder cannot attend a company meeting or does not want to vote themselves for any reason. The proxy can be given to another individual, such as a family member or friend, or to a professional proxy solicitation firm.

Question 3

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

Accepted Answer

A corporation can be held liable for torts committed by personnel of a branch office if it can be shown that the corporation had control over the actions of the personnel or if the tort was committed within the scope of employment. Thus, a corporation can be held vicariously liable for the actions of its employees.

Question 4

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

Accepted Answer

Management must 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. This is known as the "10-day rule" and applies to all solicitation materials except for those that are exempt under SEC rules. The purpose of this rule is to ensure that shareholders have adequate time to review the materials and make informed decisions about whether to vote by proxy or attend the meeting in person.

Question 5

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.

Accepted Answer

State antitakeover statutes are indeed enacted to protect local state businesses from the negative effects of being taken over by other businesses, including but not limited to plant closures, job losses, and decreased tax revenues.

Question 6

A shareholder's proxy can be granted to:

Accepted Answer

A shareholder's proxy can be granted to anyone, as it is a legal authorization for someone else to vote on their behalf at a shareholder meeting.

Question 7

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

Accepted Answer

Fines cannot be imposed on shareholders who granted proxies as they are not responsible for the information provided in the solicitation. The other options are possible consequences of including fraudulent information in a proxy solicitation.

Question 8

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.

Accepted Answer

Many state antitakeover statutes do cover corporations based on factors such as having their principal office in the state, a certain percentage of resident shareholders, or a certain percentage of the corporation's stock owned by state residents.

Question 9

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

Accepted Answer

This is true. Delaware is a popular state for incorporation due to its favorable business laws and tax policies.

Question 10

A proxy statement must include information about what?

Accepted Answer

A proxy statement must include information about who is soliciting the proxy and the matter for which the proxy is being solicited. This information is necessary for shareholders to make informed decisions about how to vote their proxies. The other answer choices are not accurate – a proxy statement does not need to include an estimated likelihood of approval, the number of proxies already executed, or pro forma financial statements.

Question 11

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

Accepted Answer

The answer of Some antitakeover statutes have been challenged as...

Question 12

Solicitation of proxies is regulated under the:

Accepted Answer

The solicitation of proxies is regulated under the Securities Exchange Act of 1934, which governs the proxy solicitation process to ensure transparency and fairness in the voting process of shareholders.

Question 13

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

Accepted Answer

State antitakeover statutes are enacted by individual states and apply only to corporations that are incorporated in that state.

Question 14

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

Accepted Answer

Delaware's corporation code includes Section 203, which restricts certain types of mergers and acquisitions and provides protection to target companies against hostile takeovers. This statute is considered one of the strongest antitakeover laws in the U.S. and has contributed to Delaware's popularity as a state of incorporation for many large corporations.

Question 15

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

Accepted Answer

A parent corporation is generally not liable for the actions of its foreign subsidiary due to the principle of limited liability, which protects shareholders (including parent companies) from being responsible for more than their investment in the subsidiary.

Question 16

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

Accepted Answer

A proxy becomes valid when the shareholder completes a written proxy statement and delivers it to the corporation.

Question 17

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

Accepted Answer

A corporation can conduct business in a foreign country through a branch office, which is an extension of the parent company, or a subsidiary corporation, which is a separate legal entity owned by the parent company.

Question 18

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.

Accepted Answer

The Delaware antitakeover statute, known as Section 203, actually imposes a three-year moratorium on mergers with an interested stockholder who acquires 15% or more of the company's stock, unless certain conditions are met.

Question 19

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?

Accepted Answer

The SEC requires a ten-day review period after filing proxy materials, during which it can request additional disclosures if necessary.

Question 20

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

Accepted Answer

A multinational corporation and a transnational corporation are both terms used to describe a company that operates in multiple countries with a decentralized management structure. The terms are interchangeable.

Quiz 29: Corporate Acquisitions and Multinational Corporations