Fundamental Changes Flashcards
Fundamental Change Approval
FC to corp must be approved by majority of BoD & majority of SHs entitled to vote
Merger, Consolidation
merger: combination of 2+ corps when 1 survives;
consolidation: 2 combine, neither survive but new entity created
Asset Sale
Fundamental change when it’s a sale or other transfer of substantially all of corporation’s assets outside regular course of business; approval required by transferor C
Stock Acquisition
gain control of another corporation w/o merger, C may acquire its stock w/ cash or thru share exchange
Amending Articles
once stock issued, articles may only be amended w/
approval by majority of SHs entitled to vote
Corp Dissolution
- Voluntary: corp entity dissolved by approval of Ds & SHs
- Involuntary: corp dissolved by ct upon petition by creditors or SHC
Creditor Dissolution
Allowed only if corp insolvent
Shareholder Dissolution
Allowed if 1 of the grounds is shown:
- Waste of corporate assets
- Illegal, oppressive fraudulent conduct
- Director deadlock & irreparable injury to C likely
- SH deadlock over election of new directors
Distribution Upon Dissolution
Directors must distribute assets to creditors, then to SHs w/ preference, then other SHs
Dissenter Right of Appraisal
forces C to buy his stock at a fair (appraised) value w/i
30 days of demand for payment
DRA: Qualifying SH
SH entitled to vote on fundamental change
DRA: Trigger
Merger, acquisition, sale of assets, amendment of articles
DRA: Procedure
- Notice written notice delivered before SH vote on action
- Disapproval SH must not vote in favor (must abstain/vote against)
- Demand SH must submit written demand for payment
- Payment C pays agreed upon fair market value or ct can appoint appraiser
