Exam 2 CHP 40,41,42 Flashcards
_____ have responsibility for all policy-making decisions necessary to the management of all corporate affairs.
Directors
_______ carry out the duties articulated in the by laws and act as agents of the corporation. Elected by the board of directors.
Officers
What are the 3 rights of directors?
- Participation
- Inspection
- Indemnification
A corporate director or officer will not be liable to the corporation or to its shareholders from honest mistakes of judgment and bad business decisions.
Business Judgment Rule
Director’s and Officer’s duties are _____ and ______.
- Loyalty
- Care
These people are responsible for choosing the board of directors and to approve of important things (bylaws, mergers, selling of assets, etc.)
Shareholders
A method designed to allow minority shareholders to be represented on the board of directors.
Cumulative Voting
A shareholder has a right to inspect and copy corporate books and records only for a ___ _____.
Proper Purpose
What are two examples of why a corporation would prevent a shareholder from inspecting books and records?
To prevent harassment and to protect trade secrets.
When directors fail to bring a lawsuit over a third party’s actions that harmed the corporation, then the shareholders can enact a…..
Shareholder’s Derivative Suit
Who receives the proceeds from a shareholder derivative suit?
The corporation
Involves the legal combination of two or more corporations. One of the firms survive.
Merger
Involves two or more corporations combining in such a way that each corporation ceases to exist and a new one emerges.
Consolidation
Some or all of the shares of one corporation are exchanged for some or all of the shares of another corporation, but both corporations continue to exist.
Share Exchange
Procedure for the merger of a substantially owned subsidiary corporation into its parent corporation. Doesn’t need approval from shareholders.
Short-form merger
The statutory right to be paid the fair value of the shares that dissenting shareholders own after a disapproved merger.
Appraisal Rights
When an acquiring corporation deals directly with the target corporation’s shareholders in seeking to purchase the shares they hold.
Tender Offer
When a target company pays a higher-than-market price to repurchase all of the stock that the acquiring corporation bought. The acquiring corporation may use this tactic to profit off of the target company paying a premium on the repurchasing of stock.
Greenmail
When a target corporation issues to its stockholders rights to purchase additional shares at low prices when there is a takeover attempt. Used to dilute an acquiring corporation’s holding during a takeover.
Poison Pill
A thing that involves an investment from several people into a common enterprise that expect a profit to come from the effort of others.
Security
A disclosure that describes the security being sold, the financial operations of the issuing corporation, and the investment or risk attaching to the security.
Prospectus
The do nothing period where a corporation cannot offer to sell, sell, or condition the market for future sell.
Prefiling Period
The do a little period where a corporation can make oral offers to sell.
Waiting Period
The do anything period where a corporation can start selling stock and closing transactions.
Posteffective Period
