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Exam 31: Combining and Dissolving a Corporation

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Question 31

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Building Corporation and Construction Inc. combine so that only Construction continues to exist. This is

A) a takeover.
B) a merger.
C) a liquidation.
D) a share exchange.

E) A) and D)
F) All of the above

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Question 32

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Alice and Bernie pool their money and talents to form Cutting Edge Corporation, a precision tooling company. They are the firm's only shareholders, directors, and officers. After five years of declining home prices, they decide to cease business. Can they simply dissolve their corporation at will? If so, what are the steps in the process?

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Alice and Bernie can dissolve their corp...

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Question 33

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Fact Pattern 31-4 Carrier Company exchanges some of its shares for some of the shares of Distribution Corporation. The exchange is used to create Equity Inc., whose business activity is to hold the shares of the two companies. Refer to Fact Pattern 31-4. Equity Inc. is

The sale and distribution of the assets of a business on its termination is

No state allows the combination of a domestic corporation with a foreign corporation.

Dissolution of a corporation can be brought about by an agreement between the shareholders and the board of directors.

During the liquidation process, corporate assets are converted into cash.

Fact Pattern 31-6 Sweet Inc. acquires all of the assets of Tart Inc . by direct purchase. Refer to Fact Pattern 31-6. Sweet assumes the liabilities of Tart if

Cloud Inc. merges with Data Corporation. Cloud, the surviving corporation, issues shares or pays fair consideration to

A short-form merger is the acquisition of control over a corporation through a purchase of stock.

Generally, a corporation that acquires the assets of another corporation needs to obtain shareholder approval for the purchase.

Merger and consolidation refer to two completely different legal processes.

Fact Pattern 31-4 Carrier Company exchanges some of its shares for some of the shares of Distribution Corporation. The exchange is used to create Equity Inc., whose business activity is to hold the shares of the two companies. Refer to Fact Pattern 31-4. The plan for the exchange of shares between Carrier and Distribution must be approved by each corporation's

Fact Pattern 31-3 Bank Company decides to combine its operations with Credit Corporation to form Debit Finance Inc. Bank and Credit are domestic corporations. Refer to Fact Pattern 31-3. Before a vote is taken on the proposed combination, sufficient information to evaluate the deal must be given to each corporation's

Fact Pattern 31-1 Outlook Inc. merges with Pinnacle Inc. Only Pinnacle remains. Refer to Fact Pattern 31-1. The articles of merger

A firm may respond to a tender offer by recommending that shareholders accept the offer.

Fact Pattern 31-4 Carrier Company exchanges some of its shares for some of the shares of Distribution Corporation. The exchange is used to create Equity Inc., whose business activity is to hold the shares of the two companies. Refer to Fact Pattern 31-4. On the exchange of shares between Carrier and Distribution

The business judgment rule may apply to determine whether directors acted reasonably in resisting a takeover attempt.

The directors of Natural Food Corporation and the directors of Organic Produce, Inc. work together to develop a combination plan. They have several options. In one option, Natural Food continues to exist but Organic Produce does not. In another option, both companies cease to exist and a new company, Natural Organic, is created. In the final option, both companies continue to exist but are wholly owned by a new company, NFOP. Describe in legal terms the different options and who must approve each option.

A takeover is the acquisition of control over a corporation through a purchase of substantially all of its assets.