QUESTION: 69

ABC Corp. wants to acquire the entire business of XYZ Corp. Which of the following methods of business combination will best satisfy ABC's objectives without requiring the approval of the shareholders of either corporation?

A merger of XYZ into ABC, whereby XYZ shareholders receive cash or ABC shares.
A sale of all the assets of XYZ, outside the regular course of business, to ABC, for cash.
An acquisition of all the shares of XYZ through a compulsory share exchange for ABC shares.
A cash tender offer, whereby ABC acquires at least 90% of XYZ's shares, followed by a short-form merger of XYZ into ABC.

Answer(s): D

Explanation:

Choice "d" is correct. A parent corporation owning 90% or more of a subsidiary may merge the subsidiary (short form merger) into the parent without the approval of the shareholders of either corporation or the approval of the subsidiary's board.
Choices "a", "b", and "c" all require at least one of the corporations to follow the general procedure for fundamental corporate changes (i.e., board resolution notice, approval by majority shares, and filing).

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QUESTION: 70

Under the Revised Model Business Corporation Act, which of the following statements regarding a corporation's bylaws is(are) correct?

I). A corporation's initial bylaws shall be adopted by either the incorporators or the board of directors.
II). A corporation's bylaws are contained in the articles of incorporation.

I only.
II only.
Both I and II.
Neither I nor II.

Answer(s): A

Explanation:

Choice "a" is correct. Under the Revised Model Business Corporation act, a corporation's initial bylaws may be adopted by either the incorporators or the board of directors.
Choices "b" and "c" are incorrect, because the corporation's bylaws are a separate document not included in the corporation's articles of incorporation.
Choice "d" is incorrect, because under the Revised Model Business Corporation Act, a corporation's initial bylaws may be adopted by either the incorporators or the board of directors.

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QUESTION: 71

Under the Revised Model Business Corporation Act, which of the following must be contained in a corporation's articles of incorporation?

Quorum voting requirements.
Names of stockholders.
Provisions for issuance of par and nonpar shares.
The number of shares the corporation is authorized to issue.

Answer(s): D

Explanation:

Choice "d" is correct. The articles must set out the corporation's authorized shares.
Choice "a" is incorrect. Quorum requirements, if stated at all, usually are in the bylaws; they need not be included in the articles of incorporation.
Choice "b" is incorrect. The articles need not include the names of stockholders.
Choice "c" is incorrect. The RMBCA has eliminated the concept of par value and so does not have a requirement that par value be established in the articles.

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QUESTION: 72

Under the Revised Model Business Corporation Act, a merger of two public corporations usually requires all of the following, except:

A formal plan of merger.
An affirmative vote by the holders of a majority of each corporation's voting shares.
Receipt of voting stock by all stockholders of the original corporations.
Approval by the board of directors of each corporation.

Answer(s): C

Explanation:

Choice "c" is correct. A merger can be effected by giving some parties cash or property; not everyone need receive voting shares.
Choice "a" is incorrect. The merger must be pursuant to a formal plan.
Choice "b" is incorrect. The majority of each corporation generally must approve a merger.
Choice "d" is incorrect. A plan of merger must be approved by the boards of the merging corporations.

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QUESTION: 71

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