Question 1

Corporate creditors are required to approve a plan of merger or consolidation.

Accepted Answer

A) True 
 B)False

Question 2

Appraisal rights cannot be lost even if the statutory procedures are not followed precisely.

Accepted Answer

A) True 
 B)False

Question 3

Through a certain transaction, Coffee Café Inc. acquires all of the shares of Deli Corporation for some of Coffee's shares. Both Coffee and Deli continue to exist. This is

Accepted Answer

A)   a consolidation.
B)   a share exchange.
C)   a short-form merger.
D)   a purchase of assets.E) B) and D)
F) All of the above

Question 4

Through a tender offer, an acquiring corporation deals directly with a target company's management in seeking to purchase the target's stock.

Accepted Answer

A) True 
 B)False

Question 5

A court cannot dissolve a corporation for failure to commence business operations.

Accepted Answer

A) True 
 B)False

Question 6

To resist a takeover, a target company may make a self-tender.

Accepted Answer

A) True 
 B)False

Question 7

When a corporation is dissolved voluntarily, its assets can be liquidated without notice to its creditors.

Accepted Answer

A) True 
 B)False

Question 8

Fact Pattern 31-1 Outlook Inc. merges with Pinnacle Inc. Only Pinnacle remains.
Refer to Fact Pattern 31-1. Outlook held rights in certain real property. With regard to these assets, in the merger Pinnacle assumes

Accepted Answer

A)   none of Outlook ' s assets.
B)   only those assets acquired after the merger was proposed.
C)   an amount of assets equal to the ratio of the firms' pre-merger market values.
D)   all of Outlook ' s assets .E) None of the above
F) A) and D)

Question 9

A court can dissolve a corporation for abuse of corporate powers.

Accepted Answer

A) True 
 B)False

Question 10

Generally, a corporation that is selling all of its assets must obtain the approval of the shareholders.

Accepted Answer

A) True 
 B)False

Question 11

Fact Pattern 31-2 Dynamo Corporation combines its assets and liabilities with those of Energy Company to form Fuel Inc. Dynamo and Energy cease to exist.
Refer to Fact Pattern 31-2. With respect to the liabilities of Dynamo and Energy, Fuel Inc. acquires

Accepted Answer

A)   none of the liabilities.
B)   only those liabilities acquired after the combination was proposed.
C)   an amount of liability equal to the ratio of the firms' pre-merger market values.
D)   all the liabilities of both companies.E) C) and D)
F) A) and C)

Question 12

Fact Pattern 31-7 Enchilada Inc. seeks to purchase a substantial number of the voting shares of Fajita Inc .
Refer to Fact Pattern 31-7. The directors of Fajita resist Enchilada's takeover attempt. In analyzing whether this is reasonable, a court would apply

Accepted Answer

A)   an appraisal right.
B)   a takeover defense.
C)   the corporation's policies.
D)   the business judgment rule.E) B) and D)
F) B) and C)

Question 13

All states have statutes authorizing share exchanges for domestic corporations.

Accepted Answer

A) True 
 B)False

Question 14

Like other corporations, Market Maker Inc. can expand its operations by

Accepted Answer

A)   combining with another corporation.
B)   terminating its existence.
C)   purchasing a substantial number of its voting shares.
D)   dissolving and winding up.E) A) and D)
F) B) and C)

Question 15

Like other corporations, Social Media Inc. can expand its operations by

Accepted Answer

A)   liquidating its assets.
B)   purchasing the assets of another corporation.
C)   firing employees.
D)   distributing retained earnings to shareholders.E) All of the above
F) B) and C)

Question 16

The shareholder's appraisal right does not normally apply to sales of substantially all of the corporate assets.

Accepted Answer

A) True 
 B)False

Question 17

Before a vote is taken on a proposed combination, the shareholders must be given the same information the directors used when deciding to pursue the combination.

Accepted Answer

A) True 
 B)False

Question 18

A short-form merger can be accomplished only with the approval of the shareholders.

Accepted Answer

A) True 
 B)False

Question 19

Fact Pattern 31-6 Sweet Inc. acquires all of the assets of Tart Inc . by direct purchase.
Refer to Fact Pattern 31-6. Upton is a Tart shareholder who does not approve of the deal. In most states, Upton can

Accepted Answer

A)   reverse the deal so that Tart acquires all of the assets of Sweet.
B)   insist that the companies carry out their corporate purposes.
C)   demand appraisal rights.
D)   require the parties to cancel the deal.E) A) and D)
F) A) and C)

Question 20

Fact Pattern 31-1 Outlook Inc. merges with Pinnacle Inc. Only Pinnacle remains.
Refer to Fact Pattern 31-1. Outlook owed money to Quest Bank and other creditors. With respect to these liabilities, in the merger Pinnacle assumes

Accepted Answer

A)   none of Outlook ' s liabilities.
B)   only those liabilities incurred after the merger was proposed.
C)   an amount of liability equal to the ratio of the firms' pre-merger market values.
D)   all of Outlook ' s liabilities.E) B) and C)
F) A) and D)

Exam 31: Combining and Dissolving a Corporation

When a corporation is dissolved voluntarily, its assets can be liquidated without notice to its creditors.

Correct AnswerverifiedShow Answer

Through a certain transaction, Coffee Café Inc. acquires all of the shares of Deli Corporation for some of Coffee's shares. Both Coffee and Deli continue to exist. This is

Correct AnswerverifiedShow Answer

Appraisal rights cannot be lost even if the statutory procedures are not followed precisely.

Correct AnswerverifiedShow Answer

Fact Pattern 31-7 Enchilada Inc. seeks to purchase a substantial number of the voting shares of Fajita Inc . Refer to Fact Pattern 31-7. The directors of Fajita resist Enchilada's takeover attempt. In analyzing whether this is reasonable, a court would apply

Correct AnswerverifiedShow Answer

The shareholder's appraisal right does not normally apply to sales of substantially all of the corporate assets.

Correct AnswerverifiedShow Answer

Fact Pattern 31-1 Outlook Inc. merges with Pinnacle Inc. Only Pinnacle remains. Refer to Fact Pattern 31-1. Outlook owed money to Quest Bank and other creditors. With respect to these liabilities, in the merger Pinnacle assumes

Correct AnswerverifiedShow Answer

Fact Pattern 31-1 Outlook Inc. merges with Pinnacle Inc. Only Pinnacle remains. Refer to Fact Pattern 31-1. Outlook held rights in certain real property. With regard to these assets, in the merger Pinnacle assumes

Correct AnswerverifiedShow Answer

A short-form merger can be accomplished only with the approval of the shareholders.

Correct AnswerverifiedShow Answer

Generally, a corporation that is selling all of its assets must obtain the approval of the shareholders.

Correct AnswerverifiedShow Answer

Through a tender offer, an acquiring corporation deals directly with a target company's management in seeking to purchase the target's stock.

Correct AnswerverifiedShow Answer

Corporate creditors are required to approve a plan of merger or consolidation.

Correct AnswerverifiedShow Answer

Like other corporations, Market Maker Inc. can expand its operations by

Correct AnswerverifiedShow Answer

Before a vote is taken on a proposed combination, the shareholders must be given the same information the directors used when deciding to pursue the combination.

Correct AnswerverifiedShow Answer

A court can dissolve a corporation for abuse of corporate powers.

Correct AnswerverifiedShow Answer

To resist a takeover, a target company may make a self-tender.

Correct AnswerverifiedShow Answer

Fact Pattern 31-6 Sweet Inc. acquires all of the assets of Tart Inc . by direct purchase. Refer to Fact Pattern 31-6. Upton is a Tart shareholder who does not approve of the deal. In most states, Upton can

Correct AnswerverifiedShow Answer

Like other corporations, Social Media Inc. can expand its operations by

Correct AnswerverifiedShow Answer

All states have statutes authorizing share exchanges for domestic corporations.

Correct AnswerverifiedShow Answer

Fact Pattern 31-2 Dynamo Corporation combines its assets and liabilities with those of Energy Company to form Fuel Inc. Dynamo and Energy cease to exist. Refer to Fact Pattern 31-2. With respect to the liabilities of Dynamo and Energy, Fuel Inc. acquires

Correct AnswerverifiedShow Answer

A court cannot dissolve a corporation for failure to commence business operations.

Correct AnswerverifiedShow Answer

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