Video: Significant Changes and Termination of a Corporation

In this lesson, Nick Palazzolo, CPA, breaks down the different scenarios that lead to significant changes in a corporation, such as mergers, consolidations, share exchanges, and dissolution, highlighting the need for shareholder approval in these substantial decisions. With a focus on the protection of shareholder interests, he meticulously explains the process that corporations must follow, from board resolutions to providing notice to shareholders and obtaining voting consent. Nick also explores the concept of dissent and appraisal rights, offering insights into the situations when shareholders do not agree with a proposed corporate action. To conclude, he delves into the nitty-gritty of terminating a corporation, discussing reasons such as bankruptcy and the subsequent process of winding up, proving that even in the face of closure, understanding these procedures is essential.

"Examprep.ai helped me pass all 4 CPA exams on the first try. I highly recommend. I especially like the feedback and ratings the software provides so I know where to focus my time."

Daniel H., CPA

"I can't recommend ExamPrep.ai enough. Nick's lessons turned concepts I struggled with into strengths. I was able to pass FAR right before other exams expired!"

Andrew K, CPA

"I just want to say thank you for the great lesson videos. I couldn't stay awake through lectures of another course. After watching all your FAR lessons I was finally able to pass!"

Alyssa M., CPA Candidate

Video Transcript

Instructor: Nick Palazzolo

Nick Palazzolo is head instructor of ExamPrep.ai CPA Review. Nick's teaching style is engaging & upbeat, combining practical Big 4 tax & assurance expertise with years of 1-on-1 coaching. His lessons are concise and emphasize what you need to know to pass. Whether you're a recent grad or working full-time, we’re confident you can conquer your CPA exams with Nick’s review.

Cite this lesson

Link to this page

[[ citeExample ]]

Copy to clipboard

Copy URL to clipboard

Copy HTML to clipboard

Now we're going to talk about significant changes to a corporation. Here are examples of changes. These fundamental changes, we mentioned them earlier. These are significant events that can alter the structure, operations, or ownership of a corporation. These changes often require shareholder approval to ensure that the interests of the shareholders are protected. Some of the most common fundamental changes that are going to require shareholder approval are going to include, one, we've got mergers and consolidations. So we combine two companies, that's a merger. One corporation survives, the other ceased to exist. Consolidations, they create a new corporation while the original corporation ceased to exist. Now shareholder approval is required for both mergers, consolidations, acquisitions, anything like that. That's going to be important because these can significantly affect the ownership, control, and value of the shareholder's investments. Compulsory share exchanges. Well, a compulsory share exchange occurs when a corporation acquires all the outstanding shares of another corporation in exchange for its own shares, securities, or other consideration. Shareholders of the acquired corporation must approve the exchange as it is going to affect their ownership interests. We've got dissolution. Well, this is the process of winding up, which I would say, again, I've kind of mentioned this before, I would say it's more so sounds like winding down, but yeah, winding up the affairs of a corporation, terminating its legal existence. Shareholder approval is required because dissolution directly impacts the value of their investment and the future of the corporation. Yeah, someone shutting down my investment, I probably want to say in that as well. Any amendments to the Articles of Incorporation, that is fair as well. Changing essentially the founding documents of the entity, that again, I think that sounds pretty fair. The structure, the governance, any significant

Unlock the full video transcript and subtitles support with a free account!

Get more from this lesson

Create an account 7-day free trial. No credit card required.

Federal Tax Procedures

Module: 2 Concepts, 35 Videos

Common Law Duties and Liabilities to Clients and Third Parties Overview

1:52

Introduction to Common Law Duties and Liabilities to Clients and Third Parties

1:35

Legal Liabilities of Tax Preparers

7:08

Example of a Breach of Contract