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BLAW II > Exam 2 CHP 40,41,42 > Flashcards

Exam 2 CHP 40,41,42 Flashcards

1
Q

_____ have responsibility for all policy-making decisions necessary to the management of all corporate affairs.

A

Directors

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2
Q

_______ carry out the duties articulated in the by laws and act as agents of the corporation. Elected by the board of directors.

A

Officers

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3
Q

What are the 3 rights of directors?

A
  1. Participation
  2. Inspection
  3. Indemnification
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4
Q

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.

A

Business Judgment Rule

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5
Q

Director’s and Officer’s duties are _____ and ______.

A
  1. Loyalty
  2. Care
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6
Q

These people are responsible for choosing the board of directors and to approve of important things (bylaws, mergers, selling of assets, etc.)

A

Shareholders

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7
Q

A method designed to allow minority shareholders to be represented on the board of directors.

A

Cumulative Voting

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8
Q

A shareholder has a right to inspect and copy corporate books and records only for a ___ _____.

A

Proper Purpose

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9
Q

What are two examples of why a corporation would prevent a shareholder from inspecting books and records?

A

To prevent harassment and to protect trade secrets.

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10
Q

When directors fail to bring a lawsuit over a third party’s actions that harmed the corporation, then the shareholders can enact a…..

A

Shareholder’s Derivative Suit

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11
Q

Who receives the proceeds from a shareholder derivative suit?

A

The corporation

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12
Q

Involves the legal combination of two or more corporations. One of the firms survive.

A

Merger

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13
Q

Involves two or more corporations combining in such a way that each corporation ceases to exist and a new one emerges.

A

Consolidation

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14
Q

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.

A

Share Exchange

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15
Q

Procedure for the merger of a substantially owned subsidiary corporation into its parent corporation. Doesn’t need approval from shareholders.

A

Short-form merger

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16
Q

The statutory right to be paid the fair value of the shares that dissenting shareholders own after a disapproved merger.

A

Appraisal Rights

17
Q

When an acquiring corporation deals directly with the target corporation’s shareholders in seeking to purchase the shares they hold.

A

Tender Offer

18
Q

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.

A

Greenmail

19
Q

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.

A

Poison Pill

20
Q

A thing that involves an investment from several people into a common enterprise that expect a profit to come from the effort of others.

A

Security

21
Q

A disclosure that describes the security being sold, the financial operations of the issuing corporation, and the investment or risk attaching to the security.

A

Prospectus

22
Q

The do nothing period where a corporation cannot offer to sell, sell, or condition the market for future sell.

A

Prefiling Period

23
Q

The do a little period where a corporation can make oral offers to sell.

A

Waiting Period

24
Q

The do anything period where a corporation can start selling stock and closing transactions.

A

Posteffective Period

25
Q

A firm that has issued at least $1 billion in securities in the las 3 years or has outstanding stock valued at $700 million or more in the hands of the public. (Very large companies that issue large amounts of stock)

A

Well-Known Seasoned Issuers (WKSI)

26
Q

What are the 5 contents of the registration statement?

A
  1. Securities offered for sell
  2. Company assets and business
  3. Management of company
  4. How the company will use proceeds of sale
  5. Any pending lawsuits or special risk factors
27
Q

An exemption that has 2 tiers:
1 - Security offerings up to $20 million for 12 months
2 - Security offerings up to $50 million for 12 months - (+ changes)

A

Regulation A exemption

28
Q

An exemption (and rule) that provides small noninvestment company offerings up to $5 million in any 12 month period.

A

Regulation D - Rule 504

29
Q

An exemption (and rule) that exempts private, noninvestment company offerings that are not generally solicited or advertised.
- No limits on amounts offered
- Unlimited accredited investors
- Up to 35 unaccredited investors
- Create restricted securities

A

Regulation D - Rule 506

30
Q

An exemption that exempts offerings involved purely locally (residents within a state in which the issuing company is organized and doing business).

A

Rule 147

31
Q

An exemption that exempts restricted securities from registration on resale.

A

Rule 144

32
Q

An act that governs initial sales of stock by businesses. Designed to prohibit carious forms of fraud and to stabilize the securities industry, providing investors with the needed information before investing.

A

The Securities Act of 1933

33
Q

An act that provides for the regulation and registration of securities exchanges, brokers, dealers, and associations. Provides continuous periodic disclosures by publicly held corporations so SEC can regulate subsequent trading.

A

The Securities Exchange Act of 1934

34
Q

A section that prohibits the use of any manipulative or deceptive mechanism in violation of SEC rules and regulations.

A

Section 10(b)

35
Q

A rule that prohibits commission of fraud in connection with the purchase or sale of any security.

A

SEC Rule 10b-5

36
Q

Occurs when a persons buy or sell securities on the basis of information that is not available to the public.

A

Insider Trading

37
Q

A theory that holds liable an individual who wrongfully obtains inside information and trades on it for her or his personal gain.

A

Misappropriation Theory

38
Q

Latin - When a violator must have had an intent to defraud or knowledge of his or her misconduct.

A

Scienter

39
Q

A section that provides for the recapture by the corporation of all profits realized by an insider on a purchase and sale of corporate stocks within a 6 month period. Called a short sale or includes short-swing profits/losses

A

Section 16(b)

BLAW II (7 decks)

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