BLRB37 - Business Law and the Regulation of Business...

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Unformatted text preview: Business Law and the Regulation of Business Regulation Chapter 37: Fundamental Changes Chapter of Corporations By Richard A. Mann & Barry S. Roberts Topics Covered in this Chapter Topics A. Charter Amendments B. Combinations C. Dissolution Charter Amendments Authority to Amend – statutes permit charters to be amended. charters s Procedure – the board of directors adopts a resolution that must be approved by a majority vote of the shareholders. shareholders. s Combinations s s s Purchase or Lease of All or Substantially Purchase All of the Assets – results in no change in All the legal personality of either corporation. the Regular Course of Business – approval by the selling corporation's board of directors is required, but shareholder authorization is not. required, Other Than in Regular Course of Business – approval by the board of directors and shareholders of selling corporation is required. required. Combinations s s Purchase of Shares – a transaction by which one corporation acquires all of or a controlling interest in the stock of another corporation; no change occurs in the legal existence of either corporation, and no formal shareholder approval of either corporation is required. approval Going Private Transactions – a combination that makes a publicly held corporation a private one; includes cash-out combinations and management buyouts. and Purchase of Shares Purchase A B $ Shareholders of A are sh f so A Combinations s s Compulsory Share Exchange – a transaction by which a corporation becomes the owner of all of the outstanding shares of one or more classes of stock of another corporation by an exchange that is compulsory on all owners of the acquired shares; the directors of each corporation and the shareholders of the corporation whose shares are being acquired must approve. shares Merger – the combination of the assets of two or more corporations into one of the corporations. corporations. Merger Merger s s s Procedure – requires approval by directors and shareholders of each corporation. and Short-Form Merger – a corporation that owns 90% of outstanding shares of a subsidiary may merge the subsidiary into itself without approval of shareholders of either corporation. either Effect – the surviving corporation receives title to all of the assets of the merged corporation and assumes all of its liabilities; the merged corporation ceases to exist. the Consolidation Consolidation The combination of two or more The corporations into a new corporation. corporations s Procedure – requires approval of the board of directors and shareholders of each corporation. each s Effect – each constituent corporation ceases to exist; the new corporation assumes all of their debts and liabilities. assumes s Dissolution s s Voluntary Dissolution – may be brought about by a resolution of the board of directors that is approved by the shareholders. that Involuntary Dissolution – may occur by administrative or judicial action taken (1)-by the Attorney General, (2)-by shareholders under certain circumstances, or (3)-by a creditor on a showing that the corporation has become unable to pay its debts and obligations as they mature in the regular course of its business. course Dissolution s Liquidation – when a corporation is dissolved, its assets are liquidated and used first to pay its liquidation expenses and its creditors according to their respective contract or lien rights; any remainder is proportionately distributed to shareholders according to their respective contract rights. respective Fundamental Changes Fundamental Change Board of Director Resolution Required A: Yes B: Yes Shareholder Approval Required A: Yes B: No Shareholders’ Appraisal Remedy Available A: No, unless amendment materially and adversely affects rights of shares B: No A a mends its articles of incorporation B sells its assets in usual and regular course of business to A B sells its assets not in usual B: Yes and regular course of business to A A voluntarily purchases shares of B A acquires shares of B through a compulsory exchange A a nd B merge A merges its 90 percent subsidiary B into A A a nd B consolidate A voluntarily dissolves A: Yes B: No A: Yes B: Yes A: Yes B: Yes A: Yes B: No A: Yes B: Yes A: Yes B: Yes B: Yes A: No B: No, individual shareholders decide A: No B: Yes A: Yes B: Yes A: No B: No A: Yes B: Yes A: Yes A: No B: No A: No B: Yes A: Yes B: Yes A: No B: Yes A: Yes B: Yes A: Not usually ...
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This note was uploaded on 10/25/2009 for the course LAW 100 taught by Professor Liu during the Spring '09 term at Zhejiang University.

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