Question 1

In a merger,only the surviving corporation's shareholders are entitled to appraisal rights.

Accepted Answer

In a merger, shareholders of the corporation being merged or acquired may also be entitled to appraisal rights, not just the surviving corporation's shareholders.

Question 2

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

Accepted Answer

While some states may have specific requirements for asset sales by corporations, generally speaking, approval from the state is not required. The decision to sell assets would be made by the corporation's board of directors and approved by the shareholders. Any necessary regulatory approvals would be obtained from federal or state authorities with jurisdiction over the specific industry or assets being sold.

Question 3

Skyla and Terry want to form and do business as Unique Boutique Corporation.The state statute governing the formation and operation of their corporation is most likely guided by

Accepted Answer

The Revised Model Business Corporation Act (RMBCA) is a widely adopted statute that governs the formation and operation of corporations in many states. It provides a framework of rules and regulations for corporate governance, management, shareholder rights and responsibilities, and other matters. City or county corporate codes, the Entrepreneur's Corporate Handbook, and the federal Administrative Procedure Act are unlikely to be the primary sources of guidance for forming and operating a corporation.

Question 4

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

Accepted Answer

While court supervision may be necessary in certain situations, such as bankruptcy, corporations can also wind up their affairs voluntarily without court involvement. This can involve the distribution of assets, payment of debts and taxes, and cancellation of legal registrations and permits.

Question 5

Shareholder approval is required when a corporation buys all of the assets of another company.

Accepted Answer

The answer of Shareholder approval is required when a corporation...

Question 6

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

Accepted Answer

In most cases, the approval of officers and employees is not required for a merger to take place. The decision to merge is typically made by the board of directors and shareholders of both corporations. However, some employee groups, such as unions, may have a say in the process through collective bargaining agreements or other legal provisions. Additionally, some states may have laws requiring notice or consultation with employees before a merger can take place.

Question 7

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

Accepted Answer

The answer of In a consolidation,the consolidating corporations become subsidiaries...

Question 8

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

Accepted Answer

Appraisal rights allow shareholders to demand a fair value assessment of their shares and receive payment for such value, often serving as the only way for dissenting shareholders to receive fair compensation in a parent-subsidiary merger.

Question 9

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

Accepted Answer

The answer of Only a board of directors can initiate...

Question 10

Appraisal rights are normally available in sales of substantially all corporate assets not in the ordinary course of business.

Accepted Answer

Appraisal rights, which give shareholders the right to have their shares independently valued and potentially receive a higher price if they dissent from a corporate action, such as a merger or sale of assets, are typically available in sales of substantially all corporate assets not in the ordinary course of business.

Question 11

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

Accepted Answer

The answer of When a sale of assets amounts to...

Question 12

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

Accepted Answer

In a short-form merger, the acquiring corporation (parent) already owns at least 90% of the outstanding shares of the target corporation (subsidiary), so shareholder approval is not required by either corporation.

Question 13

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

Accepted Answer

The answer of After a merger,a disappearing corporation's preexisting rights...

Question 14

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

Accepted Answer

In a share exchange, both corporations' boards of directors need to approve the exchange in order to be valid.

Question 15

Finn and Glenda want to form and do business as Hobby Crafts Corporation.A corporation is a legal entity created and recognized by

Accepted Answer

A corporation is recognized as a legal entity by state law, which grants it certain rights, privileges, and responsibilities.

Question 16

Inez and Jason are the shareholders and directors of Kleen Kustodial Corporation.Lily and Moe are Kleen's officers.As in other corporations,the responsibility for the overall management of Kleen rests with

Accepted Answer

The overall management of Kleen Kustodial Corporation rests with the board of directors, as is the case in most corporations. While the officers are responsible for day-to-day operations, the board of directors sets policy, oversees company strategy, and makes major decisions. The owners (shareholders) are responsible for electing the board of directors and may have some voting rights on key company decisions, but they do not directly manage the company.

Question 17

Pola and Quincey want to form and do business as River Tours Corporation.A corporation can consist of

Accepted Answer

According to the laws of most countries, a corporation can consist of one or more natural persons. Therefore, Pola and Quincey can form a corporation as River Tours Corporation even though there are only two natural persons involved. Option A and B are incorrect as they limit the number of natural persons. Option D is incorrect as it implies that a corporation cannot consist of only two natural persons.

Question 18

After a consolidation,there is only one surviving corporation.

Accepted Answer

In a consolidation, multiple corporations come together to form a new corporation. Therefore, there can only be one surviving corporation after the consolidation process is complete.

Question 19

A court can dissolve a corporation for mismanagement.

Accepted Answer

According to certain state laws, a court can order the dissolution of a corporation for mismanagement. However, the specific reasons and processes vary by jurisdiction.

Question 20

Raw Resources Corporation authorizes Stefan,its employee,to oversee its mining operation.In the course of this employment,Stefan disposes of the mine's waste illegally.Liability for this crime most likely rests with

Accepted Answer

The answer of Raw Resources Corporation authorizes Stefan,its employee,to oversee...

Quiz 29: Corporate Formation, merger, and Termination