blaw chapter 34

What is a "scorched earth strategy"?

A defensive takeover strategy where the target sells off the assets that the takeover company most wants.

Which of the following statements is correct with respect to state efforts to offer protection to companies targeted for hostile takeovers?

Both statutory law and the state courts have provided some degree of protection for companies.

Which of the following describes the duty of loyalty?

It prohibits managers from making a decision that benefits them at the expense of the corporation.

Which of the following is correct concerning anti-takeover efforts?

Most states have passed laws to deter hostile takeovers, but these statutes have not totally eliminated hostile takeovers.

Which of the following is a fundamental goal of shareholders?

To have an immediate increase in stock price

On the day a tender offer begins,

a bidder must file a disclosure statement with the SEC.

States are not involved in the regulation of corporate takeovers.

false

Tender offers are regulated on the federal level by the National Labor Relations Act.

false

The "business judgment rule" has been replaced by "good faith statutes" in most states.

false

Alex is a director of ABC, Inc. Alex wants to personally make a major purchase from Bravo Co. If it knew of the opportunity, ABC might be also interested in making that same purchase. Alex must

first offer the opportunity to make the purchase to the disinterested directors of ABC or its shareholders.

Which of the following takeover defenses is evidenced by the target buying back the shark's stock at a premium price?

greenmail

For the business judgment rule to apply, the manager must

have acted in the best interests of the corporation.

The Williams Act

is designed to regulate the conduct of those attempting to take over a company.

Which of the following is NOT a method to acquire control of a company?

make an initial public offering

Anti-takeover tactics include all EXCEPT

negative tender offers

If a court determines that a manager's corporate decision amounted to self-dealing,

the business judgment rule will not apply.

The Anderson v. Bellino case held that

the defendant did not act in good faith and violated the corporate opportunity doctrine.

Amy is on the board of directors of Computers Plus. Computers Plus is looking for a warehouse to purchase. Amy owns a warehouse. In order for Amy to sell her warehouse to Computers Plus

the disinterested members of the board of directors must approve the transaction.

A director violates the corporate opportunity doctrine if he or she competes with the corporation, unless the disinterested directors approve of the director's actions.

true

A manager who has engaged in self-dealing has violated the duty of loyalty to the corporation, unless the self-dealing was entirely fair to the corporation.

true

A public offer to buy a block of stock directly from shareholders is called a tender offer.

true

A speculator plans to acquire control of Kelp Corporation and then resell it at a profit. A speculator is sometimes known as a corporate raider.

true

Directors have the authority to manage the corporate business.

true

Generally, managers that make informed decisions will not be liable even if their decision turned out badly.

true

In order to use poison pills, staggered boards of directors, and supermajority voting as takeover defenses, they must first be authorized by the shareholders.

true