Essay 5 Merger

Question 1

What normally establishes a merger? UNLESSS?

Answer 1

Adoption of a plan of merger by the board of directors of both corps.

Unless a parents owns at least 90% of outstanding shares of each class of stock in subsidiary – then it can absorb the sub w/o the sub’s BOD’s approval

Question 2

When is shareholders approval not required for a parent-sub merger?

Answer 2

When the merger will not result in a fundamental change in the Corp or ownership rights of shareholders

Question 3

, no shareholder approval from parent corp is required if:

Answer 3

1) the corporation will survive the merger ; (2) its articles of incorporation will not be changed;
(3) each
shareholder of the corporation whose shares were outstanding immediately before the effective date of the
merger will hold the same number of shares, with identical preferences, limitations, and relative rights,
immediately after the effective date of change; and
(4) the issuance in the merger of shares or othersecurities does not require a vote under the RMBCA.

Question 4

If a parent owns 90% of a subsidiary, what approval does it not need?

Answer 4

Director or shareholder

Question 5

What are appraisal rights?

Answer 5

allow shareholders to force the corporation to pay fair value for their shares in the event of certain fundamental changes, including a parent-subsidiary merger for which shareholder approval is unnecessary.

Question 6

If fair value cannot be agreed upon, who will decide?

Answer 6

Courts – Pat and Dale will offer evidence