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