39: Corporate Acquisitions and Multinational Corporations

Question 1

section 14(a) of the securities exchange act of 1934

Answer 1

a section of a federal statute that gives the SEC the authority to regulate the solicitation of proxies

Question 2

proxy statement

Answer 2

a document that fully describes (1) the matter for which a proxy is being solicited, (2) who is soliciting the proxy, and (3) any other pertinent information

Question 3

antifraud provision

Answer 3

section 14(a) of the securities exchange act of 1934, which prohibits misrepresentations or omissions of a material fact in the proxy materials

Question 4

proxy contest

Answer 4

a contest in which opposing factions of shareholders and managers solicit proxies from other shareholders; greatest votes wins

Question 5

shareholder resolution / shareholder proposal

Answer 5

a resolution that a shareholder who meets certain ownership requirements may submit to other shareholders for a vote. many contain social issues

Question 6

consolidation

Answer 6

the combination of two corporations in which a new corporation is created and the two merging corporations cease to exist

Question 7

share exchange / stock-for-stock merger

Answer 7

a situation in which one corporation acquires all the shares of another corporation, and both corporations retain their separate legal existence

Question 8

articles of merger

Answer 8

a document that must be filed with the secretary of state by the surviving corporation of a merger

Question 9

articles of share exchange

Answer 9

a document that must be filed with the secretary of state by the surviving corporation of a share exchange

Question 10

short-form merger

Answer 10

a merger between a parent corporation and a subsidiary corporation that does not require the approval of the shareholders of either corporation or the approval of the board of directors of the subsidiary corporation

Question 11

dissenting shareholder appraisal rights

Answer 11

the rights of shareholders who object to a proposed merger, share exchange, or sale or lease of all or substantially all of the property of a corporation to have their shares valued by the court and receive cash payment of this value from the corporation

Question 12

target corporation

Answer 12

a corporation that is proposed to be acquired in a tender offer situation

Question 13

tender offer

Answer 13

an offer that an acquirer makes directly to a target corporation’s shareholders in an effort to acquire the target corporation

Question 14

hostile tender offer

Answer 14

a tender offer that is made without the permission of the target company’s management

Question 15

williams act

Answer 15

a federal act that amended the securities exchange act of 1934 that specifically regulates tender offers

Question 16

fair price rule / bes price rule

Answer 16

a rule that says any increase in price paid for shares tendered must be offered to all shareholders, even those who have previously tendered their shares

Question 17

pro rata rule

Answer 17

a rule that say shares must be purchased on a pro rata basis if too many shares are tendered

Question 18

section 13(d) of the securities exchange act of 1934

Answer 18

a section of a federal statute that requires any party that acquires 5 percent or more of an equity security of a company registered with the SEC to report the acquisition to the SEC and disclose its intentions regarding the situation

Question 19

section 14(e) of the williams act

Answer 19

a section of the williams act that prohibits fraudulent, deceptive, and manipulative practices in connection with a tender offer

Question 20

crown jewel

Answer 20

a valuable asset of a target corporation that the tender offeror particularly wants to acquire in a tender offer

Question 21

poison pill

Answer 21

defensive strategies built into a corporation’s articles of incorporation, corporate bylaws, or the corporation’s contracts and leases that prevent the takeover of the corporation

Question 22

white knight merger

Answer 22

a merger of a target company of a tender offer with a friendly party that usually leaves the target corporation and/or its management intact

Question 23

reverse tender offer

Answer 23

a tender offer that is made by a target corporation to purchase the shares of the corporation that is making the tender offer on the target corporation

Question 24

employee stock ownership plan (ESOP)

Answer 24

a plan that places a certain percentage of a corporation’s securities in the plan for distribution to employees of the corporation

Question 25

flip-over rights plan

Answer 25

a defensive plan of a corporation that provides that existing shareholders of the corporation may convert their shares for a greater number (e.g., twice the value) of SHARES of an acquiring corporation once a specified percentage of its shares have been acquired by the acquiring corporation

Question 26

flip-in rights plan

Answer 26

a defensive plan of a corporation that provides that existing shareholders of the corporation may convert their shares for a greater number (e.g., twice the value) of DEBT INSTRUMENTS of the corporation once a specified percentage of its shares have been acquired by the acquiring corporation

Question 27

greenmail

Answer 27

the purchase by a target corporation of its stock from an actual or perceived tender offeror at a premium

Question 28

standstill agreement

Answer 28

an agreement entered into by a target company with a tender offeror whereby the tender offeror who receives a payment of greenmail agrees to abandon its tender offer and not purchase any additional stock of the target company for an agreed-upon period of time

Question 29

business judgment rule

Answer 29

a rule that protects the decisions of a board of directors of a corporation where the board has acted on an informed basis, in good faith, and in the honest belief that the action taken was in the best interests of the corporation and its shareholders

Question 30

antitakeover statute

Answer 30

a statute that is enacted by a state legislature that protects against the hostile takeover of corporations incorporated in or doing business in the state

Question 31

exon-florio foreign investment provision

Answer 31

a federal law that mandates that the president of the united states suspend, prohibit, or dismantle the acquisition of a u.s. business by foreign investors if there is credible evidence that the foreign investor might take action that threatens to impair national security

Question 32

foreign investment risk review modernization act (firrma)

Answer 32

a federal statute that prohibits foreign companies, persons, and enterprises owned by foreign governments or agencies from acquiring sensitively located real estate; non-controlling interest in u.s. business involved in critical technologies, critical infrastructure, or sensitive personal data of u.s. citizens; and joint ventures that involve the transfer of u.s.-origin technology

Question 33

committee on foreign investment in the united states (cfius)

Answer 33

a federal interagency committee that has been delegated executive power to review and reject foreign acquisitions and investments that violate federal laws administered by the committee

Question 34

international branch office

Answer 34

an office opened by a multinational corporation to conduct business in another country. a branch office is not a separate legal entity but meraly an office of the corporation

Question 35

international subsidiary corporation

Answer 35

a corporation owned by a multinational corporation that conducts business in another country. this subsidiary corporation is a separate legal entity from the parent corporation

Question 36

foreign corrupt practices act (FCPA)

Answer 36

a federal statute that makes it illegal for a u.s citizen or resident or u.s. companies or their officers, directors, agents, shareholders, employees, partners, or intermediaries to bribe a foreign official, or foreign political party official, a candidate for foreign political office, or an official of a public international organization, where the bribe is intended to influence the official's act or decision such that the bribing party obtains or retains business or secures an improper advantage

Question 37

united nations convention against corruption (UNCAC)

Answer 37

an international treaty that requires signatory countries to adopt anti-corruption laws, to cooperate in criminal matters and assist each other in investigating and prosecuting ciolators, and to return proceeds from corruption