Business Law, 8e: Chapter 34

Chapter 34
Business Termination and Other Extraordinary Events:

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1. In a merger, the surviving corporation has all the rights and property of the corporation with which it merged, but none of the debts and liabilities.: a. True
b. False

2. Voluntary dissolution of a corporation is a five-step process requiring a board recommendation, shareholder approval, the filing of notice to creditors, the filing of a certificate of dissolution, and the winding up of the enterprise's business.: a. True
b. False

3. A partner may withdraw from a partnership only if the partnership agreement provides for withdrawal.: a. True
b. False

4. A corporation dissolution only requires director approval.: a. True
b. False

5. An new partner, entering a preexisting partnership, has liability to preexisting creditors of the firm to the extent of his or her capital contribution.: a. True
b. False

6. Common shareholders have claims that are superior to corporate creditors in the event of liquidation.: a. True
b. False

7. If directorial deadlock makes the corporation incapable of conducting its business, shareholders may request the corporation's dissolution.: a. True
b. False

8. Creditors do not have a right to dissolve the corporation.: a. True
b. False

9. In a merger, a dissenting shareholder has the right to require the corporation to purchase his shares at fair market value.: a. True
b. False

10. A sale of all, or substantially all, of the assets of a corporation typically must be approved by the shareholders of the acquiring company.: a. True
b. False

11. Assume that a new partner enters an ongoing partnership. The new partner's liability to preexisting creditors is best described by which of the following?: a. The new partner is not liable to preexisting creditors of the firm.
b. The new partner must negotiate his or her liability with the preexisting creditors.
c. The new partner is only liable to the preexisting creditors to the extent of his or her capital contribution.
d. The new partner has unlimited personal liability to ALL creditors of the partnership.

12. Partnerships may be dissolved by all of the following except:: a. the assignment of a partner's interest.
b. an act of the partners.
c. a decree of court.
d. an operation of law.

13. When there is a merger, a shareholder's right to receive cash instead of new shares is called:: a. a preemptive right.
b. an appraisal right.
c. a consolidation right.
d. a right of first refusal.

14. When a corporation decides to buy all the assets of another firm:: a. approval by the acquiring firm's shareholders is necessary, but approval by the acquired firm's shareholders is not.
b. approval by the acquired firm's shareholders is necessary, but approval by the acquiring firm's shareholders is not.
c. approval by the acquiring and acquired firm's shareholders is necessary.
d. None of the above.

15. How does a genuine merger differ from a stock acquisition or a sale of substantially all the assets?: a. A merger requires the approval of both corporations' shareholders, but asset or stock transactions only require the approval of the acquiring corporation's shareholders.
b. Even when stock and asset acquisitions are labeled as de facto mergers by the courts, acquiring corporations need not receive shareholder approval.
c. When purchasing all of a corporation's stock, appraisal rights must be provided for the seller's dissenting shareholders.
d. Stock and asset acquisitions allow the purchaser to avoid the liabilities of the seller.