Chapter 41 business law
Step 5 of merger
State will issue a certificate of merger or consolidation
Liability when purchasing assets
1. When the purchasing corporation express or implied the sellers liabilities, 2. When sale transaction is a result of the merger, 3. When purchaser continues the sellers business, and keeps the same shareholders, officers and directors, 4. Sale is entered into fraudulent purpose to escape liability
Step 4 of merger
After plans of merger accepted by shareholders and directors the acquiring corporation must file the articles of merger, consolidation, or share exchange
Poison Pill
Allows shareholders to purchase stock at a very low price to avoid a take over
Rational response
Board of directors must response rationally when using defense tactics to protect the corporation.
Step 1 of merger
Board of directors of each corporation must approve the merger or share exchange plan
Parent corporation
If one corporation owns all of the shares of another cooperation it is referred to as what?
Merger
Legal combination of two or more corporations, where only one corporation exist after known as the surviving corporation.
step 2 of merger
Plan must specify any terms and conditions of the merger. Including the value of the shares of each merging corporation will be converted
Tender offer
Proposal to buy stock from a target corporations shareholders for cash or some type of corporate security of the acquiring company
Voluntary dissolution
Shareholders must unanimously vote to start dissolution or the board will proposes this to the shareholders
Short form mergers
Simplified procedure for a merger when a substantially owned cooperation is taken over. Also referred as a parent-subsidiary merger and can only be done when they own 90%
Share exchange
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. Usually create holding companies.
Receiver
Someone who does the winding up with dissolution is involuntary or the board members don't want to act as trustees of the assets
Golden Parachute
Special treatment such as stock options to top management when being replaced from a take over
Involuntary dissolution
State can dissolve a corporation if 1. Directors are deadlocked in management, 2. Act of directors or those in control are illegal, 3. Its assets are being wasted or misapplied, 4. shareholder are deadlocked on voting its directors
White knight
To avoid a take over, they create a merger with a 3rd party which makes them better and rescues them
Pac-man
To avoid a takeover the company tries to take over the other company
Crown Jewel
To avoid a takeover the company will sell its most valuable assets
greenmail
To avoid takeover the company may offer to purchase higher than fair market value for its own stock
Consolidation
Two or more corporations combine in such a way that each corporation ceases to exist and a new one emerges into a completely knew entity. It inherits all of the rights, privileges, and powers previously held.
Takeover
When a company purchases a large amount of stock of the target corporation to gain control over them.
Articles of dissolution
When a corporation is dissolved voluntarily, they must file these and notify its creditors.
Appraisal rights
When a shareholder does not approve of the merger and no longer wants the shares they have the right to be paid the fair value of the shares owned on the date of the merger.
Subsidiary company
When all of one companies shares are owned by another company it is known as what?
step 3 of merger
majority of shareholders of each corporation must vote and approve the plan of merging at a shareholders meeting
Dissolution
the legal death of the artificial person of the corporation
Winding up
when the corporations assets are liquidated