Fundamental Corp. Changes Flashcards
What happens in a merger?
In a consolidation?
In a share exchange?
In a dissolution?
Corp. A becomes Corp. B
A and B become C
A and B exchange shares
A dissolves
What are the procedural steps for fundamental corp. changes
1) Resolution by the Board at a valid meeting;
2) Notice of Special Meeting (25-60 days in advance)
3) Approval by more than 2/3 of all shares entitled to vote (the Articles may provided for a different percentage, but never less than a majority);
4) Possibility of dissenting SH right of approval (applies to mergers, consolidations, share exchanges, and sales of substantially all assets).
5) File notice with the SCC (e.g. Articles of Merger)
What is the dissenting SH right of approval?
How does the SH perfect this right?
What happens if the SH and the Corp. cannot agree on fair value?
The right of a SH to force the corp. to buy her shares at a fair value
1) Before the SH vote, file a written notice of objection and intent to demand payment;
2) At the vote, do NOT vote for the change;
3) After the vote, timely demand payment in writing
The Court can appoint an appraiser (binding on the parties)
Can the Board alone make ministerial changes to the Articles of Incorporation?
Fundamental changes?
Yes.
No. That requires 2/3 approval of all outstanding shares.
Are there dissenting SH rights of approval for changes to the Articles?
No, but if the amendment adversely affects a class of stock, more than 2/3 of the class must approve the amendment (in addition to its being approved by more than 2/3 of all outstanding shares)
When one corporation sells all or substantially all of its assets to another, for which corp. is this a fundamental change?
The selling corp. only, thus requiring approval by more than 2/3 of all outstanding shares.
The sale is subject to the SH dissenting right of approval.
