for the 75 balance on the subscription price because SSI had become the new

For the 75 balance on the subscription price because

This preview shows page 13 - 15 out of 29 pages.

for the 75% balance on the subscription price because SSI had become the new debtor under Subscription Agreements Nos. 1805, and 1808 to 1811." XI. Question: Yenetic Corporation wants to increase its Authorized Capital Stock (which is currently fully subscribed and issued) to be able to increase its working capital to undertake business expansions. The Board of Directors consults with you as legal counsel on the proper answers to the following issues: (a) Can Yenetic's AOI be formally amended to remove the right of appraisal on all dissenting stockholders in all matters under the law which requires a ratification vote of the stockholders? (b) If the increase in Authorized Capital Stock is formally submitted to the stockholders in a meeting duly called for the purpose, what is the vote necessary for the stockholders' ratification, and may the dissenting stockholders exercise their appraisal right? (c) Once the increase in the Authorized Capital Stock of Yenetic has been legally effected with the SEC, can the new shares from the unissued shares be offered to a new limited group of investors without having to offer them to the shareholders of record since no pre-emptive right is provided for in the AOI and By-laws of Yenetic? Answer: (a) No. Yenetic’s AOI cannot be formally amended to remove the right of appraisal on all dissenting stockholders in all matters under the law which requires a ratification vote of the stockholders.
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Appraisal right is a statutory right. Sec. 80 of the Revised Corporation Code provides that any stockholder of a corporation shall have the right to dissent and demand payment of the fair value of his shares in the following instances: (1) In case any amendment to the articles of incorporation has the effect of changing or restricting the rights of any stockholder or class of shares, or of authorizing preferences in any respect superior to those of outstanding shares of any class, or of extending or shortening the term of corporate existence; (2) In case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of all or substantially all of the corporate property and assets; and (3) In case of merger or consolidation; and (4) In case of investment of corporate funds for any purpose other than the primary purpose of the corporation. One of the instances where a shareholder shall have the right of appraisal is when any amendment to the articles of incorporation has the effect of changing or restricting the rights of any stockholder or class of shares. Such right cannot be denied to the stockholders in cases where the law allows such right. Therefore, Yenetic’s AOI cannot be amended to remove appraisal right of the stockholders on matters requiring their approval in cases where the law grants them such appraisal right.
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  • Spring '14
  • FelishaK.McCaster
  • Corporation, AOI, Authorized Capital Stock

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