Question

Summer Foods is a public corporation that is experiencing difficulty growing its vegetable products during an especially dry summer season. Wanting the flexibility to make decisions for restructuring the company's operations, its managers buy all the stock, which means the company is
A. essentially shutting down operations.
B. initiating an initial public offering.
C. taking the company private.
D. changing to a quasi-public corporation.
E. converting the company to a nonprofit.

Answer 1

Answer:

C) taking the company private.

Explanation:

When turn a public company into a private company again, it is exactly the opposite to incorporating a company. All it means is that the company's stocks will not be publicly traded anymore. A public corporation's stockholders have the right to elect a board of directors that represents them, and that board sets the company's strategies and long term goals and has the power to appoint a new CEO, CFO and COO. If the managers bought all the outstanding stock, then the board is eliminated and they can manage the company however they want without having to request any type of authorization from the board of directors.