V. Fundamental Corporate Changes

Question 1

Characteristics of Fundamental Corporate Change

Answer 1

Board cannot do them alone (amending art.; selling off all assets; merging)

(1) Board Action adopting a resolution of fundamental change
(2) Board submits proposal to SH w/written notice
(3) MUST get SH approval (entitled to vote)
(4) Deliver doc. to Sec. of State

Dissenting SH Right of Appraisal
-Right to force the corp. to buy your stock at fair value

Question 2

Right of Appraisal

Answer 2

(1) Merging or consolidating
(2) Transferring substantially all assets NOT in the ordinary course of business or
(3) Transferring its stock in a share exchange

EXISTS in Close Corp.

TO PERFECT:

• Before SH vote, file w/the corp. written notice of objection and intent to demand payment
• Abstain or vote against the proposed change AND
• After the vote, w/in time set by corp. make written demand to be bought out and deposit stock w/the corp.

Question 3

Mergers or Consolidation

Answer 3

Maj. of Shares ENTITLED TO VOTE
-Right of appraisal: Generally, for SH entitled to vote on the merger or consolidation and also for SH of subsidiary in short-form merger

EFFECT of Merger or Consolidation: SURVIVING Corp. succeeds to all rights and liabilities of the constituents (So a creditor of that corp. can sue the survivor)

Question 4

Transfer of ALL or Substantially ALL of the Assets NOT in the Ordinary Course of Biz OR Share Exchange

Answer 4

These are FUNDAMENTAL Corporate changes for the SELLING Corp. ONLY (not the buyer)

Question 5

Dissolution

Answer 5

• Voluntary
• Involuntary (by court order)

Winding Up: Gathering all assets, converting to cash, paying creditors, distributing remainder to Sh, pro-rata by share unless there is a liquidation preference