Fundamental Corporate Changes Flashcards
(33 cards)
What is a fundamental corporate change?
It is so fundamental that it requires that both the board and shareholders approve. The Corporation also must notify department of state which the department then files.
What is a dissenting shareholders right of appraisal?
Right to buy your stock at fair value.
What are examples of other fundamental changes that give rise to right of appraisal?
Amendments to certificate, merger, transfer of substantially all assets, shares acquired in a share exchange.
Is there a right of appraisal for listed companies?
No it is only available for close corporations.
How do shareholders take action to perfect their right of appraisal?
1) before vote they file written objection and intent to demand payment;
2) Abstain from the vote or against the change;
3) After vote make written demand to be brought out.
What if they cannot agree on the fair value?
Corporation sues and the Court determines value.
What amendments to the certificate can the board make?
Minor changes such as those relating to office location and registered agent can be made by board alone
How can more major amendments get approval?
With director action and the majority of shares entitled to vote.
What shareholder vote do you need if you are going to change or strike a supermajority quorum or voting requirement for shareholder voting?
2/3 shares entitled to vote.
What if the amendment is approved?
Deliver certificate of amendment to department of state for filing.
What if the amendment alters or abolishes a preference, changes redemption rights, alters or abolishes a pre-emptive right or limits voting rights?
There are dissenting rights of appraisal.
What shareholder approval is needed for merger?
Both corporations’ shareholders majority of voting shares.
What merger situation would no shareholder approval be required?
In a short form merger where the parent corporation owns 90% or more of each class of stock of a subsidiary that is merged into parent corporation. Do need 1) board of parent corp adopt plan, 2) copy or outline of plan of merger be given to outside shareholders of subsidiary and 3) certificate of merger be filed not less than 30. Days after notice to outside shareholders
Do dissenting shareholders in a short form merger have right of appraisal?
Yes they do even though they didn’t vote.
What is the effect of a merger or consolidation?
The surviving corporation succeeds to all rights and liabilities of the disappearing corporation.
What is a transfer of all or substantially all of the assets not in the ordinary course of business or share exchange?
One corporation acquires all of the outstanding shares of one or more classes of another corporation.
Is selling all or substantially all the assets or share exchange a fundamental corporate change?
Is is for the selling corporation only.
How does a sale of substantially all assets or share exchange go down?
Each corporations board of directors authorizes the deal and selling corporations shareholder’s approve by majority of shares entitled to vote. the buyer company doesn’t need to do this.
Are there dissenting shareholders’ rights of appraisal in selling the company?
Yes.
What are the filing requirements of a) transfer of assets and b) share exchange?
No filing requirement for transfer of assets but delivery to department of state for filing required.
Does the buying company acquiring assets have liability for torts of the company whose assets it acquired?
No generally unless the deal provided otherwise, the purchasing company is mere continuation of the seller or the deal was entered fraudulently to escape such obligations.
Why is selling of assets different to merger?
Because with merger, selling company doesn’t still exist like it does here. Creditors can still sue it.
Is board vote needed for dissolution?
No its voluntary, majority of shares entitled to vote needed from shareholders.
What is done after shareholders vote on dissolution?
Certificate of dissolution is sent to department of state for its filing.
