Fundamental Changes in Corporate Structure

Question 1

What is the procedure for making a fundamental change to the structure of a corporation?

Answer 1

1) the board of directors adopts a resolution; 2) written notice is given to the shareholders; 3) the shareholders approve the changes; and 4) the changes in the form of articles are filed with the state.

Question 2

The corporation can amend its articles with any provision that would be ___________ in original articles.

Answer 2

lawful

Question 3

Do housekeeping amendments require approval?

Answer 3

generally, no

Question 4

Merger

Answer 4

the blending of one or more corporations into another corporation.

Question 5

Do the merged corporations survive after a merger?

Answer 5

no, only the corporation into which they are merged survives.

Question 6

Share Exchange

Answer 6

one corporation purchasing all of the outstanding shares of one or more classes or series of another corporation.

Question 7

Conversion

Answer 7

one business entity changing its form to another business entity.

Question 8

The merger of one or more corporations into another corporation need not be approved by the shareholders of the surviving corporation if:

Answer 8

1) the articles of incorporation will remain the same; 2) all shareholders will have the same number of shares as before; and 3) the voting power of the shares issued as a result of the merger will not comprise more than 20 percent of the voting power of the shares of the surviving corporation that were outstanding immediately prior to the merger.

Question 9

When can a parent corporation merge a subsidiary corporation into itself without having to get approval of the subsidiary?

Answer 9

where the parent owns more than 90 percent of the outstanding shares of the subsidiary.

Question 10

Who must approve a share exchange?

Answer 10

only the shareholders of the corporation whose shares will be acquired in the share exchange.

Question 11

Where a corporation purchases the property of another corporation, does it become liable for the obligations of the seller?

Answer 11

no

Question 12

If a corporation approves a fundamental change, and shareholders dissent from the change, what is their remedy?

Answer 12

they have the right to have the corporation purchase their shares.

Question 13

When will dissenting shareholders not have a right to have the corporation purchase their shares if they dissent against a fundamental change in the corporation?

Answer 13

when the corporation is publicly-traded.