Merger and Consolidation Flashcards
What is the difference between a merger and a consolidation?
There is merger if two or more corporations may merges into a single corporation which shall be one of the constituent corporations.
There is consolidation if two or more corporations consolidate into a new single corporation, which shall be the consolidated corporation.
What are the different forms of corporate combinations?
The Revised Corporation Code allows a union of the corporations and the union may be effected by :
(1) One corporation selling all or substantially all of its assets to another
(2) By one corporation, without being dissolved, leasing its property to another corporation for which the lessor merely receives rental paid by the lessee
(3) By sale of stocks where a holding company acquires a sufficient amount of the stock of another corporation for the purpose of acquiring control
What is the procedure for a merger or consolidation?
(1) The board of directors or trustees of each corporation, party to the merger or consolidation, approves a plan of merger or consolidation.
(2) Upon approval by a majority vote of each of the board of directors or trustees of the constituent corporations of the plan of merger or consolidation, the same shall be submitted for approval by the stockholders or members of each of such corporations at separate corporate meetings duly called for the purpose. The affirmative vote of stockholders representing at least two-thirds of the outstanding capital stock of each corporation in the case of stock corporations or at least two-thirds of the members in the case of nonstock corporations shall be necessary for the approval of such plan. Any dissenting stockholder may exercise the right of appraisal.
(3) After approval by the stockholders or members, the articles of merger or articles of consolidation shall be executed by each of the constituent corporations.
(4) The articles of merger or of consolidation shall be submitted to the Commission for its approval.
(5) If the Commission is satisfied that the merger or consolidation of the corporations concerned is consistent with the provisions of the Revised Corporation Code, it shall issue a certificate approving the articles and plan of merger or of consolidation, at which time the merger or consolidation shall be effective.
What are the effect of a merger or consolidation?
The merger or consolidation shall have the following effects:
(1) The constituent corporations shall become a single corporation which, in case of merger, shall be the surviving corporation designated in the plan of merger, and in case of consolidation, shall be the consolidated corporation designated in the plan of consolidation.
(2) The separate existence of the constituent corporations shall cease, except that of the surviving or the consolidated corporation
(3) The surviving or the consolidated corporation shall all the rights, privileges, immunities, and powers and shall be subject to all the duties and liabilities of a corporation organized under this Code
(4) The surviving or the consolidated corporation shall possess all the rights, privileges, immunities and franchises of each constituent corporation; and all real or personal property, all receivable due on whatever account, including subscriptions to shares and other choses in action, and every other interest of, belonging to, or due to each constituent corporation, shall be deemed transferred to and vested in such surviving or consolidated corporation without further act or deed
(5) The surviving or consolidated corporation shall be responsible for all the liabilities and obligations of each constituent corporation as though such surviving or consolidated corporation had itself incurred such liabilities or obligations; and any pending claim, action or proceeding brought by or against any constituent corporation may be prosecuted by or against the surviving or consolidated corporation. The rights of creditors or liens upon the property of such constituent corporations shall not be impaired by the merger or consolidation
