Chapter 13 Practice Question Answers
1. Answer: C. Any issuer or an affiliate of the issuer that is taking itself private (as opposed to being taken private through an acquisition by a private equity firm or other outsider) must file a Schedule 13E-3. Any person making a tender offer must file a Schedule TO. Therefore, both are required filings in these circumstances. Schedule 14D-9 is only required if the person making a tender offer is a third party, which is not the case here. Schedule SR is not an SEC form.
2. Answer: B. A tender offer must remain open for at least 20 business days. Holding a tender offer open for less than 20 business days is considered an unlawful practice. If the price offered or percentage of securities sought changes, the tender offer must remain open for at least 10 business days after notice is given of the change.
3. Answer: D. A, B, and C each describe an unlawful tender offer practice. D describes a practice that, while unlikely to entice shareholders to tender shares, is not unlawful. The tender offer rules do not require tender offers to be fairly priced.
4. Answer: A. While Rule 14e-2 requires management to communicate its position on the tender offer to shareholders within 10 days, management does not have to recommend acceptance or rejection; it could remain neutral or take no position. The other options are all true. Rule 14e-5 generally prohibits a person making a tender offer from purchasing or arranging to purchase the securities that are the subject of the tender offer except as part of the tender offer. Rule 14e-4 prohibits anyone from tendering a security in a partial tender offer unless the person tendering has a net long position in the security equal to or greater than the amount tendered. Since the offer is for less than all shares, the prohibition on short tendering applies. Regulation 14D requires any bidder in a tender offer that would result in the acquisition of more than 5% of the target company to