QUESTION: 113

Generally, a merger of two corporations requires:

That a special meeting be held and that notice and copy of the merger plan be given to all stockholders of both corporations.
Unanimous approval of the merger plan by the stockholders of both corporations.
Unanimous approval of the merger plan by the boards of both corporations.
That all liabilities owed by the absorbed corporation be paid before the merger.

Answer(s): A

Explanation:

Choice "a" is correct. The merger of two corporations requires that a special meeting be held and that notice and copy of the merger plan be given to all stockholders of both companies. A merger generally requires the approval of both the directors and stockholders.
Choice "b" is incorrect. While the stockholders' approval is required, in most states a majority vote is required; no state requires a unanimous vote.
Choice "c" is incorrect. While the board's approval is required, a majority vote and not a unanimous vote is required.
Choice "d" is incorrect. There is no requirement that all liabilities owed by the absorbed corporation be paid before the merger because the merged corporation becomes obligated to pay such liabilities upon the merger.

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QUESTION: 114

In a member managed LLC, the apparent authority of a member to bind the LLC in dealing with third parties:

Would permit a member to submit a claim against the LLC to arbitration.
Must be derived from the express powers and purposes contained in the operating agreement.
Will be effectively limited by a formal resolution of the members of which third parties are aware.
Will be effectively limited by a formal resolution of the members of which third parties are unaware.

Answer(s): C

Explanation:

Choice "c" is correct. This is really an agency question on apparent authority. Apparent authority is authority that a third party reasonably believes an agent has. If the third party is aware of a restriction on the agent's authority, the third party cannot reasonably believe that the agent has the restricted authority.
Choice "a" is incorrect. Submitting a claim to arbitration is an extraordinary act and so is not within a member's apparent authority.
Choice "b" is incorrect. Apparent authority is derived from what the reasonable person believes is the authority of a member, not the express powers and purposes contained in the operating agreement.
Choice "d" is incorrect. A formal resolution of the members will not be effective to destroy apparent authority if third parties are unaware of the resolution.

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QUESTION: 115

Unless otherwise provided in a general partnership agreement, which of the following statements is correct when a partner dies?

Option A
Option B
Option C
Option D

Answer(s): D

Explanation:

Choice "d" is correct. "No - No - No." Upon the death of a general partner:
Rule: A partner's death is an event of dissociation. Where a partner dissociates, the partner's right to participate in the management ceases; the partner's executor does not take the partner's place.
Rule: The partner's estate remains liable for the partner's obligations to the partnership and has a right to the deceased partner's share of distributions.
Rule: Under the Revised Uniform Partnership Act, a partnership does not automatically dissolve on the death of a partner; rather it will dissolve only if 90 days pass and the remaining partners do not wish to continue the partnership.
Choices "a", "b", and "c" are incorrect, per the above rules.

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QUESTION: 116

Under the Revised Model Business Corporation Act, which of the following actions by a corporation would entitle a stockholder to dissent from the action and obtain payment of the fair value of his/her shares?

I). An amendment to the articles of incorporation that materially and adversely affects rights in respect of a dissenter's shares because it alters or abolishes a preferential right of the shares.
II). Consummation of a plan of share exchange to which the corporation is a party as the corporation whose shares will be acquired, if the stockholder is entitled to vote on the plan.

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

Answer(s): C

Explanation:

Choice "c" is correct. "Both I and II."
Rule: Shareholders who vote against a share exchange are entitled to payment for fair value of their shares. Rule: Preferred shareholders who dissent to having their preferential rights altered or abolished have dissenters' rights to be paid the fair value of their shares.
Choices "a", "b", and "d" are incorrect, per the above rules.

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QUESTION: 113

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QUESTION: 114

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QUESTION: 115

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QUESTION: 116

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