Fundamental Changes

Question 1

Types of Fundamental Changes

Answer 1

Amending articles
Merging or consolidating
Transferring all assets or stocks
Converting to another form of business
Dissolving

Question 2

Procedure for Fundamental Changes

Answer 2

Board adopts resolution of change
Board submits proposal to shareholders
Shareholders approve
Deliver document to secretary of state

Question 3

Right of Appraisal

Answer 3

For the following changes, a shareholder who gave notice of objection and did not vote in favor of the change has a right to have the corporation buy back their stock for a fair value:
-Merging or consolidating
-Transferring all assets or stocks
-Converting to another form of business

Question 4

Mergers

Answer 4

Blending one or more corporations into another; the latter survives.

No shareholder approval required for the surviving corporation if articles aren’t changing, number of shares they hold aren’t changing, and voting power isn’t changing.

Question 5

Consolidation

Answer 5

Two corporations combine to form a new entity.

Question 6

Transfers of assets or stocks

Answer 6

These are fundamental on the selling side only.

Question 7

Voluntary Dissolution

Answer 7

Voluntary dissolution can occur:
-via fundamental change procedure
-via vote of majority of incorporators or initial directors if shares have not yet been issued/business has not commenced

Question 8

Involuntary Dissolution

Answer 8

Involuntary dissolution can occur by court order due to fraud, director misconduct, no directors, insolvent, etc.

Question 9

Effect of Dissolution

Answer 9

Corporation cannot carry on any business except as appropriate to wind up. Creditors must be notified and paid. Any remaining moneys are distributed to shareholders.