Question 1

A shareholder of Nico Corporation dissents to the corporation's merger with Jinx Corporation.If the appraisal remedy is granted, the shareholders will be paid the:

Accepted Answer

The appraisal remedy allows dissenting shareholders to be paid the fair value of their shares, reflecting the true economic value of the shares at the time of the merger, rather than their par, stated, or book value.

Question 2

Under the 1999 amendments to the Revised Act, charter amendments need be approved by only a plurality of the shares cast at a meeting at which exists a quorum consisting of at least a majority of the votes entitled to be cast on the amendment.

Accepted Answer

The statement accurately describes the approval process for charter amendments under the 1999 amendments to the Revised Act.

Question 3

The attorney general of the state of incorporation may bring a court action to dissolve a corporation if the corporation obtained its charter through fraud.

Accepted Answer

According to most state laws, the attorney general of the state of incorporation may bring a court action to dissolve a corporation if the corporation obtained its charter through fraud.

Question 4

The management of Corporation A forms Corporation B.Corporation B issues bonds to institutional investors to raise cash, with which it purchases the assets or stock of Corporation A.The assets of Corporation A are used as security for the bonds issued by Corporation B.This action by management is best described as a:

Accepted Answer

This action is best described as a leveraged buyout, where a company is acquired using a significant amount of borrowed money to meet the cost of acquisition. The assets of the company being acquired (Corporation A, in this case) are often used as collateral for the loans needed to finance the buyout.

Question 5

After dissolution, the corporation must cease carrying on its business except as is necessary to wind up.

Accepted Answer

According to the legal concept of dissolution, a corporation must cease its regular business activities after dissolution except as necessary to wind up its affairs and end its existence. This is because dissolution represents the end of the corporation's legal existence and ability to conduct ongoing business, though it may continue to exist in some limited capacity for the purpose of winding up its affairs.

Question 6

The case of Alpert v.28 Williams St.Corp.involves a compulsory share exchange.

Accepted Answer

The case of Alpert v. 28 Williams St. Corp. is primarily concerned with the issue of minority shareholder oppression and not a compulsory share exchange.

Question 7

The statutory provisions governing dissolution and liquidation usually prescribe procedures to safeguard the interests of the corporation's creditors.These procedures include:

Accepted Answer

The statutory provisions for dissolution and liquidation are designed to protect creditors' interests by preserving claims against the corporation, requiring a general publication of notice to inform potential claimants, and mandating the mailing of notice to known creditors to ensure they are aware of the dissolution process and can act to protect their interests.

Question 8

Cash-out combinations are used to eliminate minority shareholders by forcing them to accept cash or property for their shares.

Accepted Answer

Cash-out combinations are a strategy often used by majority shareholders to eliminate the ownership of minority shareholders. This is done by forcing the minority shareholders to sell their shares for cash or other property, effectively removing them from the company's ownership structure.

Question 9

A court may not dissolve a corporation in a proceeding brought by a shareholder if it is only established that the acts of the directors are merely oppressive and not destructive.

Accepted Answer

Courts can dissolve a corporation in a proceeding brought by a shareholder if it is established that the acts of the directors are oppressive, even if not destructive, to the interests of the shareholders. Oppressive actions by directors that unfairly prejudice shareholders or disregard their interests can be grounds for legal action, including dissolution.

Question 10

After an amendment to the corporate charter has been approved, it must be filed with the secretary of state.

Accepted Answer

After an amendment to the corporate charter has been approved, it must be filed with the secretary of state in order to become effective.

Question 11

Incorporation statutes usually provide only for involuntary dissolution of a corporation.

Accepted Answer

Incorporation statutes may also provide for voluntary dissolution of a corporation.

Question 12

A mortgage or pledge of any or all of a corporation's property and assets-whether in the usual or regular course of business or not- requires the approval of the board of directors and the shareholders.

Accepted Answer

The answer of A mortgage or pledge of any or...

Question 13

Management buyouts commonly make extensive use of borrowed funds.

Accepted Answer

Management buyouts often involve borrowing a significant amount of money, either from banks or other sources, to finance the acquisition of the company by its management team. This allows them to buy the company without using their own capital upfront and also increases their potential returns if the company performs well after the buyout. However, it also means that the company will take on significant debt, which can have implications for its financial stability and future growth prospects.

Question 14

Statutory provisions protect creditors upon the dissolution of a corporation.

Accepted Answer

Statutory provisions provide for the orderly distribution of a corporation's assets to its creditors upon dissolution, ensuring that they are paid before shareholders receive any remaining assets.

Question 15

Under the Dodd-Frank Act signed into law in 2010, proxy solicitations asking shareholders to approve an acquisition, merger, or consolidation in publicly held companies must provide shareholders with a binding vote to approve any compensation relating to these combinations.

Accepted Answer

The Dodd-Frank Act requires that shareholders be given a "say on pay" vote, which is advisory and not binding, regarding executive compensation in the context of mergers, acquisitions, or consolidations. This means shareholders can express their approval or disapproval of executive compensation packages, but their vote does not have the legal power to enforce changes.

Question 16

The consolidation of AB Corporation and ZX Corporation requires the affirmative majority vote of:

Accepted Answer

The consolidation of two corporations typically requires the approval of both the boards of directors and the shareholders of both corporations. This ensures that both the management and the owners of the companies agree with the consolidation.

Question 17

A dissenting shareholder who complies with all applicable requirements is entitled to an appraisal remedy.

Accepted Answer

Under corporate law, a shareholder who dissents from certain corporate actions (such as a merger or acquisition) and complies with all applicable requirements, is entitled to an appraisal remedy. This means they can request a court to determine the fair value of their shares, rather than accepting the price offered by the corporation.

Question 18

Any method of combination of corporations that involves shares, proxy solicitations, or tender offers may be subject to federal securities regulation.

Accepted Answer

Federal securities regulation applies to any method of combination of corporations that involves shares, proxy solicitations, or tender offers.

Question 19

The combination of two or more corporations into a new corporation is known as:

Accepted Answer

Consolidation involves the combination of two or more corporations into a new entity, where the original corporations cease to exist and a new corporation is formed.

Question 20

AB Corporation consolidates with ZX Corporation to form A-Z Corporation.The debts of AB Corporation are:

Accepted Answer

When two corporations consolidate to form a new entity, the new corporation typically assumes the debts of the consolidating corporations. This means A-Z Corporation would assume the debts of AB Corporation.

Quiz 36: Fundamental Changes of Corporationspart Viii: Debtor and Creditor Relations