Pampered Pooches, Inc. proposes a merger with Sit Means Sit, Inc. (SMS). SMS will obtain the approval of its shareholders; and then, by operation of law, SMS shares will become shares of the surviving corporation, Pampered Pooches, Inc. Assume that prior to the merger Paulie Smith owned 25% of SMS stock that he purchased three years before in a private placement. Smith will only own 2% of the Pampered Pooches shares and will not be an officer or director of the merged company. Is it necessary to register the Pampered Pooches shares? May Smith freely resell his Pampered Pooches shares? Would it matter whether the shares were registered in connection with the merger?
Pampered Pooches, Inc. proposes a merger with Sit Means Sit, Inc. (SMS). SMS will obtain the approval of its shareholders; and then, by operation of law, SMS shares will become shares of the surviving corporation, Pampered Pooches, Inc. Assume that prior to the merger Paulie Smith owned 25% of SMS stock that he purchased three years before in a private placement. Smith will only own 2% of the Pampered Pooches shares and will not be an officer or director of the merged company. Is it necessary to register the Pampered Pooches shares? May Smith freely resell his Pampered Pooches shares? Would it matter whether the shares were registered in connection with the merger?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Pampered Pooches, Inc. proposes a merger with Sit Means Sit, Inc. (SMS). SMS will obtain the approval of its shareholders; and then, by operation of law, SMS shares will become shares of the surviving corporation, Pampered Pooches, Inc. Assume that prior to the merger Paulie Smith owned 25% of SMS stock that he purchased three years before in a private placement. Smith will only own 2% of the Pampered Pooches shares and will not be an officer or director of the merged company.
- Is it necessary to register the Pampered Pooches shares?
- May Smith freely resell his Pampered Pooches shares?
- Would it matter whether the shares were registered in connection with the merger?
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