Flashcards in Corporations Deck (67)
Director approval + SH approval for each corp, unless a short-form merger (90% or more from each clas of stock) in which case only dissenting SHs get appraisal rights and no one gets voting rights.
Transfer of All or Substantially All Asseta
Only selling corp gets voting rights and appraisal rights for SH of selling corp only
Liability of buyer corp when buying substantially all assets
Generally a company acquiring assets will not be liable for the torts of company whose assets it acquired unless (1) deal provides otherwise; (2) purchasing company = mere continuation of seller; or (3) deal entered into fraudulently to escape obligations.
Successor liability not automatic in this situation b/c the company selling its assets still exists
Mortgage of substnatially all assets
N?ot a fundamental corp change; director approval only
VOLUNTARY: Majority of shares entitled to vote must approve (no Board action required).
INVOLUNTARY (JUDICIAL ORDER):
(1) BoD resolution or resolution of majority of shares entitled to vote b/c C has insufficient capital to discharge liabilities, or dissolution beneficial to SHs.
(2) 1/2 or more shares entitled to vote my petition, if directors too divided to manage or SHs too divided to elect directors, or dissolution otherwise beneficial b/c of internal dissension
(3) Any SH entitled to vote may petition if unable to elect D's for two annual meetings;
(4) *** A SH with 20% or more of voting shares in CLOSE CORP may petition on either of two grounds:
- mgmt's illegal, oppressive, or fraudulent acts;
-- mgmt's wasting, diverting, or looting assets
-- court may deny if another way to give SH a fair return on investment, as by ordering buy-out
-- Non-complaining SHs can try to avoid dissolution within 90 days of petition by buying stock at fair value on terms approved by court
Mergers must be for a legitimate corporate purpose, even if approved by requisite number of shares. A freeze-out merger, aimed at unfairly cashing out minority shareholders, can be reversed by the court if, looking at the transaction as a whole, the court determines there has not been fair price and fair dealing. Looks at -- whether deal tainted by self-dealing or fraud; whether minority SHs are dealt with fairly; whether there is a legitimate business reason for the merger.