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Question 6: The Tidewater Life and Health Insurance Company is owned by its policy owners, who are
entitled to certain rights as owners of the company, and it issues both participating and
nonparticipating insurance policies. Tidewater is considering converting to the type of company that
is owned by individuals who purchase shares of the company's stock. Tidewater is incorporated
under the laws of Illinois, but it conducts business in the Canadian provinces of Ontario and
Manitoba.
Tidewater established the Diversified Corporation, which then acquired various subsidiary firms that
produce unrelated products and services. Tidewater remains an independent corporation and
continues to own Diversified and the subsidiaries. In order to create and maintain a common vision
and goals among the subsidiaries, the management of Diversified makes decisions about strategic
planning and budgeting for each of the businesses.
In order to become the type of company that is owned by people who purchase shares of the
company's stock, Tidewater must undergo a process known as
A. management buy-out
B. piercing the corporate veil
C. demutualization
D. mutualization
Correct Answer: C
1   2   3   4   5   6   7   8   
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