Corp - Fundamental Corporate Changes Flashcards
What are the three basic requirements for fundamental corporate change?
(1) Absent extraordinary occurrences, they require board of director action; AND
(2) Notice to all shareholders;
(3) Approval by 2/3 of the share entitled to vote.
When will a shareholder have a dissenting SH right to appraisal?
(1) Merger
(2) Transfer of substantially all assets not in the ordinary course of business
(3) Transfer of shares in a share exchange
(4) Some amendment to the articles –> Must harm your interest in the stock [changing pfd. stock to c/s]
(5) Conversion
How does a SH perfect their right to appraisal?
(1) Before shareholder vote, file with corporation notice of intent to demand payment.
(2) When the SH vote, abstain or vote no.
(3) After the deal is approved, make written demand to be bough out.
* Corp then pays what it determines is fair value of the stock. If the payment is too low, SH within 30 day sens to corp her estimate of value.
If corp disagree, it sues within 60 days of receipt.
What amendments require only a majority of shares entitled to vote (not 2/3 as required for major changes?
(1) Change corporation name
(2) Change authorized shares.
What is required for approval of mergers?
(1) Board Action of Both Corporation
(2) Notice to all SH of the disappearing corp.
(3) Shareholder approval (usually only for the disappearing corporation) [Need 2/3 entitled to vote]
* No SH approval required if a 90% or more owned sub is merged into parent - Short form merger.
Disappearing shareholders could have right to appraisal.
What is required in a sale of all or substantially all of the assets not in the ordinary course of business or share exchange?
(1) Board Action (both corp.)
(2) Notice to all of the selling corp. shareholders
(3) Approval by selling shareholders.
No liability of company debts for selling corp. Selling SH - appraisal rights.
What is required to convert from one form of business to another?
Requires board action plus approval by 2/3 of shares entitle to vote.
ALL THESE THINGS REQUIRE DELIVERY OF ARTICLE OF CONVERSION TO STATE SECRETARY.
What is required for voluntary dissolution of the company?
(1) Board Action
(2) Approval by 2/3 of those entitled to vote
(3) Deliver Articles of Dissolution to State Secretary
(4) Notice to Creditors
What is required for involuntary dissolution of the company?
(A) 40 percent of the voting shares can petition b/c of
(1) director deadlock that threats irreparable harm to the corp;
(2) SH deadlock and failure for at least two annual meetings to fill a vacant board position
Court alternative to dissolution - order buyout of the petitioning SH especially in a close corp.
(B) A creditor can petition b/c the corporation is insolvent and either (1) has an unsatisfied judgment against the corp; or (2) the corp. admits the debt in writing.
What is an administrative dissolution?
State Sec can effect dissolution for corporate failure to file annual report or pay taxes for two years or if corporation inactive or if dissolution is in public interest.
Must give notice and 90 days to fix the problem.
After article of voluntary dissolution are filed, what are the four steps to wind up the corp?
(1) Gather all assets
(2) Convert to Cash
(3) Pay creditors; and
(4) Distribute remainder to S/H pro-rata by share unless there is a dissolution (or liquidation) preference.
