MN Bar Business Organizations and Corporations 3 — Questions and Answers
Question 1: Under Minnesota corporate law, a merger between two corporations is effective upon:
- Board approval of both corporations
- Shareholder approval alone
- Filing articles of merger with the Secretary of State (Correct answer)
- Court approval of the merger plan
Correct answer: Filing articles of merger with the Secretary of State
Under Minn. Stat. § 302A.641, a merger becomes effective when the articles of merger are filed with the Minnesota Secretary of State.
Question 2: Under the Minnesota Revised Uniform Limited Liability Company Act, unless otherwise provided in the operating agreement, voting rights are allocated:
- Equally, one vote per member (Correct answer)
- In proportion to each member's profit interest
- Based on capital contributions
- According to the order in which members joined
Correct answer: Equally, one vote per member
Under Minn. Stat. § 322C.0407, absent an operating agreement provision, each member has one vote, regardless of the size of their interest.
Question 3: Under Minnesota law, apparent authority of an agent to bind a principal arises when:
- The agent acts in good faith
- The principal's conduct leads a third party to reasonably believe the agent is authorized (Correct answer)
- The agent has been employed for more than one year
- The contract benefits the principal
Correct answer: The principal's conduct leads a third party to reasonably believe the agent is authorized
Apparent authority arises when the principal's words or conduct cause a third party to reasonably believe the agent has authority, even if no actual authority was granted.
Question 4: Under Minnesota law, a non-compete agreement in an employment context is enforceable if:
- It is included in the employment contract regardless of its scope
- It is reasonable in scope, geographic area, and duration, and supported by adequate consideration (Correct answer)
- The employee signed it at any time during employment
- The employer operates in multiple states
Correct answer: It is reasonable in scope, geographic area, and duration, and supported by adequate consideration
Minnesota courts enforce non-compete agreements that are reasonably limited in duration, geography, and scope and are supported by adequate consideration such as initial employment or a raise.
Question 5: Under the Minnesota Business Corporation Act, cumulative voting for directors:
- Is mandatory in all Minnesota corporations
- Allows shareholders to concentrate votes to elect at least one director representing minority interests (Correct answer)
- Is prohibited as anti-competitive
- Only applies to public companies
Correct answer: Allows shareholders to concentrate votes to elect at least one director representing minority interests
Cumulative voting, if authorized, allows a shareholder to multiply their votes by the number of directors to be elected and concentrate all votes on one candidate, giving minority shareholders representation.
Question 6: Under Minnesota law, when a corporation dissolves voluntarily, its assets must be distributed in which order?
- Shareholders first, then creditors, then employees
- Creditors first, then any remaining assets to shareholders (Correct answer)
- Equally among all claimants
- Preferred shareholders first, then creditors, then common shareholders
Correct answer: Creditors first, then any remaining assets to shareholders
Upon dissolution, a corporation must first pay or provide for all corporate debts and liabilities, and only then distribute remaining assets to shareholders in accordance with their rights.
MN Bar Business Organizations and Corporations 3
Under Minnesota corporate law, a merger between two corporations is effective upon: