Chapter 36 Fundamental Changes of Corporations

authority to amend

incorporation statutes permit corporate articles of incorporation to be amended

procedure for amending

the board of directors adopts a resolution, which must be approved by a majority vote of the shareholders

Purchase or lease of all or substantially all of the assets

results in no change in the legal personality of either corporation

Disposition of assets in regular course of business

approval by the selling corporation’s board of directors is required, but shareholder authorization is not required

Disposition of assets other than in regular course of business

approval by the board of directors and shareholders of the selling corporation is required

Purchase of shares

a transaction by which one corporation acquires all of, or a controlling interest in, the stock of another corporation; no change occurs in the legal existence of either corporation and no formal shareholder approval of either corporation is required

tender offer

general invitation to all of the shareholders of a target company to tender their shares for sale at a specified price

compulsory share exchange

a transaction by which a corporation becomes the owner of all of the outstanding shares of one or more classes of stock of another corporation by an exchange that is compulsory on all owners of the acquired shares; the board of directors of each corporation and the shareholders of the corporation whose shares are being acquired must approve

Effect of merger

the surviving corporation receives title to all of the assets of the merged corporation and assumes all of its liabilities; the merged corporation ceases to exist

Procedure for merger

requires approval by the board of directors and shareholders of each corporation

Merger

the combination of the assets of two or more corporations into one of the corporations

short-form merger

a corporation that owns at least 90 percent of the outstanding shares of a subsidiary may merge the subsidiary into itself without approval by the shareholders of either corporation

Effect of consolidation

each constituent corporation ceases to exist; the new corporation assumes all of their debts and liabilities

Procedure for consolidation

requires approval of the board of directors and shareholders of each corporation

consolidation

the combination of two or more corporations into a new corporation

domestication

the Revised Act permits a corporation to change its state of incorporation

conversion

the Revised Act permits (1) a domestic business corporation to become a domestic or foreign partnership, limited liability company (LLC), or other eligible entity; and (2) a domestic or foreign partnership, LLC, or other eligible entity to become a domestic business corporation

Going private transactions

a combination that makes a publicly held corporation a private one; includes cash-out combinations and management buyouts

Dissenting shareholder

one who opposes a fundamental change and has the right to receive the fair value of her shares

appraisal remedy

the right of a dissenter to receive the fair value of his shares (the value of shares immediately before the corporate action to which the dissenter objects takes place, excluding any appreciation or depreciation in anticipation of such corporate action unless such exclusion would be inequitable)

voluntary dissolution

may be brought about by a resolution of the board of directors that is approved by the shareholders

Involuntary dissolution

may occur by administrative or judicial action taken (1) by the attorney general, (2) by shareholders under certain circumstances, and (3) by a creditor on a showing that the corporation has become unable to pay its debts and obligations as they mature in the regular course of its business

Liquidation

when a corporation is dissolved, its assets are liquidated and used first to pay its liquidation expenses and its creditors according to their respective contract or lien rights; any remainder is proportionately distributed to shareholders according to their respective contract rights