5. Fundamental Corporate Changes Flashcards
What are five examples of fundamental corporate changes?
- Amending the articles
- Merging
- Transfering more than 75% assets
- Converting to other form of business
- Dissolution
What are the four requirement to make a fundamental change?
- Board adopts resolution of change
- Board submits proposal to SHs with written notice
- Majority of shares entitled to vote approve
- Submit change to secretary of state
What is the right of appraisal, and what triggers it?
SH’s right to force corp to buy their stock at a fair value
Applies when the SH dissents to a fundamental change
If they dissent to a fundamental change, is the right of appraisal a SH’s only remedy?
Unless they can allege fraud, yes
What is the only corporate change for which there is no right of appraisal? How come?
Dissolution, because the stock is dissolving too
There is no right of appraisal if what is true of a company? How come?
Publically traded or more than 2,000 SHs; easy to sell in these instances
What are the three steps to properly exercising the right of appraisal?
- File written notice of objection and demand for payment before vote on change
- At the vote, abstain or vote against
- After vote, make written demand to be bought out
What is a short form merger and what is the consequence?
Where a 90%+ owned subsidiary is merged into the parent; no SH approval needed
What is successor liability in the context of a general merger?
Creditors of the corp which is absorbed can seek payment from the remaining corp
Is there succesor liability when 75%+ of assets are sold? How come?
Generally no; because the underlying company still exists
In what one instance will there be Is there succesor liability when 75%+ of assets are sold?
When the buyer is a mere continuation of the seller, i.e. same mgmt, etc
