Mann_BLRB 9_TB_Ch37

Business Law and the Regulation of Business

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Chapter 37—Fundamental Changes of Corporations TRUE/FALSE 1. Shareholder approval of a fundamental change means a unanimous vote. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 2. The 1999 amendments to the Revised MBCA did not change the voting rule; fundamental changes still need be approved by a majority of the votes entitled to be cast. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 3. Shareholders do not have vested property rights resulting from provisions in the articles of incorpora- tion. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 4. A purchaser of all the assets normally does not assume the liabilities of that company. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 5. In a purchase or lease of all or substantially all of the assets of another corporation, the purchaser or lessee corporation simply acquires ownership or control of additional physical assets of the other cor- poration. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 6. A sale of substantially all of the assets of a corporation that is in the ordinary course of business of the corporation will not require shareholder approval. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 7. If Able Corporation purchases all of the stock of Beta Corporation rather than all of its assets, there is now a change in Beta Corporation's legal status. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 8. Brown Corporation purchased all of the stock of Gremlin Corporation. The appraisal remedy is not available to a dissenting shareholder of Brown Corporation. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 9. A compulsory share exchange happens when two companies wish to merge into one. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 10. A compulsory share exchange happens when there is a purchase of a controlling interest in a corpora- tion. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic
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11. A "short-form merger" requires shareholder approval of both corporations. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 12. If Corporation J and Corporation K combine all of their assets and create a consolidated corporation; Corporation J and Corporation K will cease to exist. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 13. The Revised Act takes the position that consolidations are, for all practical purposes, obsolete. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 14. If a purchaser of all of a corporation's assets continues the seller's product line, some courts impose upon the purchaser strict tort liability for defects in products previously manufactured by the seller cor- poration. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 15. A shareholder who opposes a fundamental change to the corporation must make a written demand within the prescribed time period in order to be entitled to payment for his shares. ANS: T
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Mann_BLRB 9_TB_Ch37 - Chapter 37-Fundamental Changes of...

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