Question 1

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

Accepted Answer

A proxy becomes valid when the shareholder completes a written proxy document and delivers it to the corporation, authorizing someone else to vote on their behalf.

Question 2

The Williams Act requires that tender offers be open at least 20 days.

Accepted Answer

The Williams Act requires that tender offers be open at least 20 days.

Question 3

A proxy statement must include information about which of the following?

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 is required by the SEC rules. The proxy statement may also include other information such as the positions of the soliciting parties, their financial interests, and other relevant information that can help shareholders make informed decisions. However, the other choices listed are not required to be included in a proxy statement.

Question 4

The term greenmail refers to the agreement of the tender offeror to abandon its tender offer and not purchase any additional stock.

Accepted Answer

The answer of The term greenmail refers to the agreement...

Question 5

Federal law requires that the target company be notified of a tender offer before the offer is made.

Accepted Answer

Federal law requires that the target company be notified of a tender offer after the offer is made, not before.

Question 6

Shareholders are not allowed to make individual decisions whether to sell their shares to the tender offeror.

Accepted Answer

Shareholders are allowed to make individual decisions whether to sell their shares to the tender offeror. They have the right to either accept or reject the offer.

Question 7

The pro-rata rule holds that the shares must be purchased on a pro-rata basis if too many shares are tendered.

Accepted Answer

The pro-rata rule is a requirement that shareholders tendering their shares to a company's tender offer must do so on a pro-rata basis. This means that if too many shares are tendered, each shareholder will only be able to sell a portion of their shares proportionate to their ownership in the company. This rule ensures that all shareholders are treated fairly and that no one shareholder is given an unfair advantage in the tender offer process.

Question 8

When a company is the target of a hostile takeover,it cannot issue additional stock simply to make the takeover more expensive for the acquiring company.

Accepted Answer

A company can issue additional stock as a defense mechanism known as a "poison pill" to make a hostile takeover more expensive and difficult for the acquiring company.

Question 9

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

Accepted Answer

The board of directors, as a fiduciary, has the legal obligation to act in the best interests of the company and its shareholders, even in the event of a hostile takeover attempt.

Question 10

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 SEC at least 10 days in advance of the distribution. This allows the SEC to review the materials and ensure that they are accurate and not misleading. If financial statements will be distributed, additional requirements apply. The other choices are incorrect as they either require SEC approval or do not provide enough time for review by the SEC.

Question 11

The purpose of a proxy is to:

Accepted Answer

The purpose of a proxy is to allow a shareholder to assign their right to vote to someone else, typically to a representative who will be attending the shareholder meeting and voting on their behalf. A proxy does not transfer ownership of the shares or assign dividends to another. It also does not initiate a tender offer.

Question 12

The fair price rule in the Williams Act requires that tender offers be made for a fair price.

Accepted Answer

The Williams Act does not include a "fair price rule" for tender offers. It primarily focuses on disclosure requirements and procedural rules for tender offers.

Question 13

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

Accepted Answer

Shareholders who grant proxies are not responsible for the actions of the person soliciting the proxy. Therefore, they cannot be fined for the inclusion of fraudulent information in a proxy solicitation. Criminal action by the justice department, civil action by the SEC, orders for new elections, and suits for damages by injured shareholders are all possible consequences of including fraudulent information in a proxy solicitation.

Question 14

State antitakeover statutes became unconstitutional once the Williams Act regulated using federal law in this area.

Accepted Answer

State antitakeover statutes did not become unconstitutional once the Williams Act regulated using federal law in this area. State antitakeover statutes still exist and can supplement federal securities laws in regulating takeover attempts.

Question 15

The business judgment rule protects the decisions of the board of directors in situations where it acts in good faith that the action taken was in the best interests of the corporation and its shareholders.

Accepted Answer

The statement correctly defines the business judgment rule, which provides legal protection to board members who exercise reasonable judgment in their decision-making process and act in the best interests of the company and its shareholders.

Question 16

The Williams Act provides that if fraud is committed,both civil and criminal charges may be brought.

Accepted Answer

The Williams Act, a federal law that regulates tender offers for publicly traded companies, does provide for both civil and criminal charges to be brought in cases where fraud has been committed. This is outlined in Section 14(e) of the Act.

Question 17

A shareholder's proxy can be granted to:

Accepted Answer

A shareholder's proxy can be granted to anyone, including non-shareholders, as long as the proxy holder is authorized to act on behalf of the shareholder during the specified period. Shareholders may choose to grant a proxy to a trusted friend or family member, an independent third-party proxy solicitor, or even to management if they feel that management represents their interests well. There are no restrictions on who can be granted a proxy, only that they must be authorized by the shareholder to act on their behalf.

Question 18

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.

Accepted Answer

The answer of A poison pill refers to a target...

Question 19

Solicitation of proxies is regulated under:

Accepted Answer

The Securities Exchange Act of 1934 regulates the solicitation of proxies, which involves the process of collecting votes from shareholders for corporate decisions.

Question 20

Once a shareholder has tendered his or her shares,he or she may not withdraw them before the closing of the tender offer.

Accepted Answer

Shareholders can typically withdraw their tendered shares at any time before the tender offer expires, unless otherwise specified in the terms of the offer.

Quiz 38: Corporate Acquisitions and Multinational Corporations

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

The Williams Act requires that tender offers be open at least 20 days.

A proxy statement must include information about which of the following?

The term greenmail refers to the agreement of the tender offeror to abandon its tender offer and not purchase any additional stock.

Federal law requires that the target company be notified of a tender offer before the offer is made.

Shareholders are not allowed to make individual decisions whether to sell their shares to the tender offeror.

The pro-rata rule holds that the shares must be purchased on a pro-rata basis if too many shares are tendered.

When a company is the target of a hostile takeover,it cannot issue additional stock simply to make the takeover more expensive for the acquiring company.

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

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

The purpose of a proxy is to:

The fair price rule in the Williams Act requires that tender offers be made for a fair price.

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

State antitakeover statutes became unconstitutional once the Williams Act regulated using federal law in this area.

The business judgment rule protects the decisions of the board of directors in situations where it acts in good faith that the action taken was in the best interests of the corporation and its shareholders.

The Williams Act provides that if fraud is committed,both civil and criminal charges may be brought.

A shareholder's proxy can be granted to:

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.

Solicitation of proxies is regulated under:

Once a shareholder has tendered his or her shares,he or she may not withdraw them before the closing of the tender offer.