6. Fundamental Corporate Change Flashcards
What is required to approve fundamental corporate changes?
1) Directors’ resolution
2) Written notice to SHs
3) SH’s resolution
4) Changes incorporated into Articles
5) Articles filed with Secretary of State
When is SHs’ resolution not required for mergers?
Merger (Corporation + Surviving Corporation) (NO Surviving SH’s resolution required)
1) Surviving Corp’s articles remain the same
2) Surviving SHs’ hold same shares + rights
3) Issued shares’ voting power is max. 20% of Surviving Corp’s voting power before merger
Merger (Parent + Subsidiary) (NO Subsidiary SH’s resolution required)
1) Parent owns +90% of outstanding shares
2) Parent mails merger plan to Subsidiary SHs
When is SHs’ resolution not required for share exchange?
Only acquired SHs’ consent required
What is required for asset lease/sale/exchange?
1) +75% assets involved
2) NOT in ordinary course of business
Seller
- Liable for own obligations
Buyer
- Liable
- Liable (disguised merger) (de facto theory)
What is required for amendment of Articles?
Amended provisions would be lawful in original Articles
What type of changes may SHs exercise their right of appraisal?
Not Amendment of articles
Which SHs may exercise their right of appraisal?
Merger (Corp-Corp)
- SHs entitled to vote
Merger (Parent-Sub)
- Subsidiary SHs
Asset sale/lease/exchange
- SHs entitled to vote
What is the procedure for SHs to exercise their right of appraisal?
1) Corporation gives notice re right to dissent to SH
2) SH gives written notice re demand for payment to Corp
3) Change is approved within 10 days
4) Corp gives notice re dissenting (time + place) to SH
5) SH demands payment from Corp
- Corp pays fair estimate to Corp => SH sends notice re own fair estimate to Corp (within 30 days)
- Corp files action with Court to determine fair estimate (within 60 days)
