Question 1

In a(n)  ________, shareholders of the new corporation create new articles of incorporation called articles of consolidation.

Accepted Answer

A)   incorporation
B)   merger
C)   consolidation
D)   bankruptcy
E)   renewalF) A) and B)
G) D) and E)

Question 2

[Cheeseland Purchase] Cheeseland, Inc., manufactures processed cheese products. BigCheese, Inc., seeks to purchase Cheeseland's well-known trademarks and logos, and its factory and equipment. The Board of Directors of both companies vote in favor of the deal. Alba is a 15% shareholder of Cheeseland. Her grandfather started the business many years ago and she does not want the company to sell off its endearing trademark and the factory her grandfather built. She visits Myron, an attorney, and Myron tells her that the Board's vote is legitimate to finalize the deal with BigCheese and the best she can do is take the money. Cyril is a shareholder in BigCheese, and his grandfather was cheated fifty years ago by Alba's grandfather and he doesn't want BigCheese to be responsible for Cheeseland's enormous liabilities. Cyril threatens to take BigCheese to court because he claims shareholder approval is required to purchase Cheeseland.
-Is Cyril correct that BigCheese will be responsible for Cheeseland's liabilities?

Accepted Answer

A)   Yes, like a merger or consolidation, corporations that purchase the assets of another corporation generally acquire its liabilities.
B)   Yes, unless the contract between BigCheese and Cheeseland states otherwise.
C)   Yes, because asset purchases are treated like a merger.
D)   No, the liabilities of one corporation do not transfer to the other unless there is an express agreement otherwise.
E)   No, corporations that purchase the assets of another corporation generally do not acquire its liabilities.F) C) and D)
G) C) and E)

Question 3

Which of the following occurs when a target corporation offers to buy its shareholders' stock?

Accepted Answer

A)   A self-tender offer
B)   A leveraged buyout
C)   A cross-tender offer
D)   A challenge-tender offer
E)   An illegal tender offerF) A) and D)
G) B) and D)

Question 4

In response to Jude and Rostan's plan, can the corporation issue statements to its shareholders to educate them on the disadvantages of a takeover?

Accepted Answer

A)   No, a corporation is prohibited from making these types of statements during a takeover.
B)   No, unless the statement also educates shareholders on the advantages of a takeover.
C)   Yes, as long as corporate funds are not used and the statement also educates shareholders on the advantages of a takeover.
D)   Yes, as long as corporate funds are not used.
E)   Yes, and corporate funds may be used for this purpose.F) All of the above
G) A) and C)

Question 5

________ of a corporation occurs in two phases: dissolution and liquidation.

Accepted Answer

A)   The incorporation
B)   The bankruptcy
C)   The "death"
D)   The merger
E)   The consolidationF) B) and E)
G) None of the above

Question 6

In the Case Opener, a decision of the Federal Trade Commission blocking a proposed merger between Polypore and Microporous Products was appealed on the basis that it would substantially lessen competition. Which of the following was the result on appeal?

Accepted Answer

A)   That the Federal Trade Commission erred in treating the merger as a vertical merger instead of a horizontal merger and that the proposed merger should have been allowed to proceed.
B)   That the Federal Trade Commission erred in determining that the proposed merger would substantially lessen competition and that the merger should have been allowed to proceed.
C)   That the Federal Trade Commission erred in asserting jurisdiction over the dispute and that the matter would be remanded to the federal district court.
D)   That the Federal Trade Commission properly determined that a horizontal merger was involved that would substantially lessen competition.
E)   That although the Federal Trade Commission erred in treating the merger as a horizontal merger rather than as a vertical merger, the Commission properly determined that the proposed merger would substantially lessen competition.F) B) and D)
G) C) and E)

Question 7

[Green Trees] Keith, the president of Grow True Corporation, a company that provides landscaping services, wanted his corporation to purchase Grassroots Corporation, another corporation providing landscaping services. The board of Grassroots Corporation, however, did not wish to sell. The board of Grow True Corporation decided to buy any or all of Grassroots Corporation's stock in order to gain control of Grassroots Corporation. The management of Grassroots Corporation and its board strongly objected to the attempt by Grow True Corporation to take over the company. Grow True Corporation offered to purchase stock held by Grassroots shareholders at a price substantially above the current market value of the stock. When that strategy was not wholly successful, Grow True Corporation offered to give shareholders of Grassroots Corporation stock in Grow True Corporation in return for their Grassroots Corporation stock.
-The attempt of Grow True Corporation to take over Grassroots Corporation despite the objection of management and the board of Grassroots Corporation is referred to as which of the following?

Accepted Answer

A)   Under the table takeover
B)   Surprise takeover
C)   Strategic takeover
D)   Hostile takeover
E)   Planned takeoverF) A) and E)
G) B) and D)

Question 8

List in detail the four universal requirements for a merger or acquisition, including what most states require in regard to shareholder approval.

Accepted Answer

The following requirements apply for a m...

Question 9

Which of the following is true about acquisitions of domestic and foreign corporations?

Accepted Answer

A)   Acquisitions between domestic corporations are very different from acquisitions between corporations from different states.
B)   Acquisitions between domestic corporations and acquisitions between foreign corporations are governed by federal law.
C)   Acquisitions between domestic corporations and acquisitions between foreign corporations are governed by the same law.
D)   Though there are some minor differences in procedure, acquisitions between domestic corporations are very similar acquisitions between corporations from different states.,
E)   Federal statutes govern all mergers and consolidations.F) D) and E)
G) B) and D)

Question 10

In a short-form merger, the parent corporation ________

Accepted Answer

A)   must file for bankruptcy within 30 days of the merger.
B)   must hire all members of the merged company.
C)   must allow for the board of directors to continue to operate the merged corporation's assets.
D)   must own at least 90 percent of the outstanding shares of each class of the subsidiary's stock.
E)   does not assume any debt, liabilities or assets.F) B) and D)
G) B) and E)

Question 11

Stacia, a shareholder in ZipCorp, learns that ZipCorp's Board of Directors have voted for ZipCorp to merge with ZenCorp. Stacia objects to the merger because the shareholders did not vote to approve the merger. Under which of the following scenarios would a shareholder, like Stacia, not have a right to vote for a merger?

Accepted Answer

A)   If ZenCorp were a foreign corporation.
B)   If ZipCorp were a foreign corporation.
C)   If the FCC approved ZenCorp's plan.
D)   If ZenCorp owned at least three-fifths of ZipCorp's stock.
E)   If ZenCorp owns at least 90% of the outstanding shares of ZipCorp stock.F) A) and E)
G) D) and E)

Question 12

In a consolidation, the surviving corporation does not have to compensate the shareholders of the corporation that no longer exists if the compensation would damage the new corporation's bottom line.

Accepted Answer

A) True 
 B)False

Question 13

[Corporate Death] Janelle is president and a large shareholder in RecyCALL, a corporation that sells used cellular telephones. Although the company was not insolvent, sales had been significantly down, and Janelle decided that it would be a good idea to discontinue the business. The board of directors agreed with her. The board members presented the proposal to discontinue the corporation to shareholders. Initially, Ahmed, a disgruntled shareholder, opposed ending the corporation. He claimed that the problem was that Janelle had done a poor job in management. Janelle planned to go forward with the termination of the company because a majority of the shareholders agreed. Ahmed, however, came around; and upon a second vote to discontinue the corporation, the vote was unanimous. Tony, a vice president of the corporation, was aware of a few outstanding debts owed by RecyCALL. He suggested hurrying along quietly with ending the corporation because any claims not made before the corporation was dissolved could be avoided. Janelle told him that she was not sure that was a good idea. Therefore, the company proceeded with all appropriate notifications. When the time came to liquidate the corporation, the members of the board did not want to participate. Janelle was concerned about what action to take at that point because she really wanted to be finished with RecyCALL.
-Which of the following is true regarding Tony's suggestion that dissolution be implemented quickly in order to avoid claims by creditors?

Accepted Answer

A)   His suggestion was a good one because in that way, the claims could likely be avoided.
B)   His suggestion would not avoid claims because the law requires that creditors be allowed at least 120 days after dissolution in order to make a claim.
C)   Whether or not his suggestion will help depends on the corporation's articles of incorporation which set forth the time period during which creditors may file claims following dissolution.
D)   Whether or not his suggestion will help depends on the corporation's bylaws which set forth the time period during which creditors may file claims following dissolution.
E)   His suggestion was a good one only for debts outstanding for over 1 year; otherwise, the creditors have at least six months following dissolution in which to make claims.F) B) and D)
G) None of the above

Question 14

Asset purchases are similar to mergers and consolidations because a corporation that purchases the assets of another corporation generally acquires its liabilities.

Accepted Answer

A) True 
 B)False

Question 15

An absorbed corporation is a(n)

Accepted Answer

A)   term for a company that does not survive a merger.
B)   shell of a corporation after bankruptcy.
C)   absorbed corporation that the government controls.
D)   the surviving corporation in a merger.
E)   a term that the SEC uses to force two companies to merge.F) B) and E)
G) None of the above

Question 16

Which of the following is true regarding Tyler's belief that Alec will be unable to collect anything for the accident after the joining of the businesses?

Accepted Answer

A)   Tyler is correct that Alec will be unable to win in litigation against him so long as the joining is completed before Alec files the lawsuit.
B)   Tyler is correct that Alec will be unable to win in litigation against him regardless of whether the lawsuit is filed before or after the joining so long as no judgment is entered prior to the joining.
C)   Tyler is correct that Alec will be unable to sue him unless Alec files in court an objection to the joining and prevails.
D)   Tyler is correct that Alec will be unable to win in litigation against him unless Alec can establish fraud in connection with the joining.
E)   Tyler is incorrect, and the joining will have no effect on the lawsuit.F) A) and C)
G) A) and B)

Question 17

In a merger, which of the following is true regarding the property of the absorbed corporation?

Accepted Answer

A)   It must be sold and distributed to the absorbed corporation's shareholders.
B)   It must be held in trust for at least one year to satisfy claims of creditors.
C)   It is obtained by the surviving corporation.
D)   It must be held in trust for at least six months to satisfy claims of creditors.
E)   It must be placed within the jurisdiction of the secretary of state for at least one year in order to satisfy claims of creditors.F) A) and B)
G) A) and C)

Question 18

Under which of the following circumstances would a court likely not enforce involuntary dissolution of a corporation.

Accepted Answer

A)   The articles of incorporation were forged.
B)   The directors abused their power.
C)   Failure to pay taxes within forty-five days of the due date.
D)   The corporation is insolvent.
E)   Gridlock over an issue persists among the directors.F) A) and E)
G) A) and D)

Question 19

In the text case, Parshall v. HCSB Financial Corporation, a plaintiff shareholder sought a preliminary injunction to stop a pending vote by shareholders of the merger between HCSB Financial and United Community Bank, Inc (UBI) . Plaintiff alleged that the Registration Statement was misleading and incomplete. Which of the following was the result?

Accepted Answer

A)   The court held that the plaintiffs' proof was insufficient under the Water's factors to issue the preliminary injunction stopping the merger vote.
B)   The court held that the plaintiff had enough proof to stop the merger vote because the defendant HCSB had hidden financial information from the shareholders in regards to the merger.
C)   The court held that the defendants according to the evidence had in fact raised issues sufficient to cause the SEC to also question the merger tactics of the companies.
D)   The court held that plaintiff was too late in the merger process to stop the vote with a preliminary injunction because the voting proxies had already been sent to hundreds of voters.
E)   The court held that the plaintiff was not the proper plaintiff to bring the case and dismissed the case.F) B) and E)
G) A) and C)

Question 20

Two security services, A-to-Z Security and Secure-Safe Security, propose to merge. Each corporation has fewer than 10 shareholders. The proposed merger receives majority shareholder approval. Roberto, a minority shareholder who owns 10% of the stock in Secure-Safe Security, however, is very much opposed to the merger. He tells the other Secure-Safe shareholders that unless they convince him otherwise, he will block the merger. What are Roberto's rights as a dissenting shareholder, and does he have the power to block the merger?

Accepted Answer

A dissenting shareholder does not have t...

Exam 40: Corporations: Mergers, Consolidations, Terminations

________ of a corporation occurs in two phases: dissolution and liquidation.

Correct Answer
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An absorbed corporation is a(n)

Correct Answer
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Which of the following is true about acquisitions of domestic and foreign corporations?

Correct Answer
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Correct Answer
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Which of the following occurs when a target corporation offers to buy its shareholders' stock?

Correct Answer
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Correct Answer
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In a merger, which of the following is true regarding the property of the absorbed corporation?

Correct Answer
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Correct Answer
verified

In response to Jude and Rostan's plan, can the corporation issue statements to its shareholders to educate them on the disadvantages of a takeover?

Correct Answer
verified

List in detail the four universal requirements for a merger or acquisition, including what most states require in regard to shareholder approval.

Correct Answer
verified
The following requirements apply for a m...
View Answer

In a consolidation, the surviving corporation does not have to compensate the shareholders of the corporation that no longer exists if the compensation would damage the new corporation's bottom line.

Correct Answer
verified

Correct Answer
verified

In a short-form merger, the parent corporation ________

Correct Answer
verified

Which of the following is true regarding Tyler's belief that Alec will be unable to collect anything for the accident after the joining of the businesses?

Correct Answer
verified

Asset purchases are similar to mergers and consolidations because a corporation that purchases the assets of another corporation generally acquires its liabilities.

Correct Answer
verified

Correct Answer
verified

In the Case Opener, a decision of the Federal Trade Commission blocking a proposed merger between Polypore and Microporous Products was appealed on the basis that it would substantially lessen competition. Which of the following was the result on appeal?

Correct Answer
verified

Correct Answer
verified
A dissenting shareholder does not have t...
View Answer

Under which of the following circumstances would a court likely not enforce involuntary dissolution of a corporation.

Correct Answer
verified

In a(n) ________, shareholders of the new corporation create new articles of incorporation called articles of consolidation.

Correct Answer
verified

Exam 40: Corporations: Mergers, Consolidations, Terminations

________ of a corporation occurs in two phases: dissolution and liquidation.

Correct AnswerverifiedShow Answer

An absorbed corporation is a(n)

Correct AnswerverifiedShow Answer

Which of the following is true about acquisitions of domestic and foreign corporations?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following occurs when a target corporation offers to buy its shareholders' stock?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In a merger, which of the following is true regarding the property of the absorbed corporation?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In response to Jude and Rostan's plan, can the corporation issue statements to its shareholders to educate them on the disadvantages of a takeover?

Correct AnswerverifiedShow Answer

List in detail the four universal requirements for a merger or acquisition, including what most states require in regard to shareholder approval.

Correct AnswerverifiedThe following requirements apply for a m...View AnswerShow Answer

In a consolidation, the surviving corporation does not have to compensate the shareholders of the corporation that no longer exists if the compensation would damage the new corporation's bottom line.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In a short-form merger, the parent corporation ________

Correct AnswerverifiedShow Answer

Which of the following is true regarding Tyler's belief that Alec will be unable to collect anything for the accident after the joining of the businesses?

Correct AnswerverifiedShow Answer

Asset purchases are similar to mergers and consolidations because a corporation that purchases the assets of another corporation generally acquires its liabilities.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the Case Opener, a decision of the Federal Trade Commission blocking a proposed merger between Polypore and Microporous Products was appealed on the basis that it would substantially lessen competition. Which of the following was the result on appeal?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedA dissenting shareholder does not have t...View AnswerShow Answer

Under which of the following circumstances would a court likely not enforce involuntary dissolution of a corporation.

Correct AnswerverifiedShow Answer

In a(n) ________, shareholders of the new corporation create new articles of incorporation called articles of consolidation.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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The following requirements apply for a m...
View Answer

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A dissenting shareholder does not have t...
View Answer

Correct Answer
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Correct Answer
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