Commercial Law, 2011 Bar — Question 47

MULTIPLE CHOICE

T Corp. has a corporate term of 20 years under its Articles of Incorporation or from June 1, 1980 to June 1, 2000. On June 1, 1991 it amended its Articles of Incorporation to extend its life by 15 years from June 1, 1980 to June 1, 2015. The SEC approved this amendment. On June 1, 2011, however, T Corp decided to shorten its term by 1 year or until June 1, 2014. Both the 1991 and 2011 amendments were approved by majority vote of its Board of Directors and ratified in a special meeting by its stockholders representing at least 2/3 o f its outstanding capital stock. The SEC, however, disapproved the 2011 amendment on the ground that it cannot be made earlier than 5 years prior to the expiration date of the corporate term, which is June 1, 2014. Is this SEC disapproval correct? A) No, since the 5-year rule on amendment of corporate term applies only to extension, not to shortening, of term. B) Yes, any amendment affecting corporate term cannot be made earlier than 5 years prior to the corporation’s expiration date. C) No, since a corporation can in fact have a corporate life of 50 years. D) Yes, the amendment to shorten corporate term cannot be made earlier than 5 years prior to the corporation’s expiration date.

You can write freely without an account. Sign in to reveal the suggested answer and track your progress.