Law Outlines Business Association (Duke Cox) Outlines
Business Association Outline for Professor Cox from Duke Law...
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Procedure
Alpha pays consideration (Alpha stock) for Beta’s assets per K.
Beta dissolves and liquidates.
Beta pays a liquidating distribution (a dividend) to its stockholders.
Alpha, per K, can choose which assets and liabilities it wants to assume.
Del. Buyer SH: no vote
No SH vote required, no 20% rule
But NYSE has 20% rule
Del. Seller Board and SH approval:
§ 271: to sell, lease, or exchange “all or substantially all” of property and assets of a corporation, including goodwill and franchises, a corporation must have
Board approval and
Approval of a majority of the holders of the outstanding stock entitled to vote
MBCA- buyer board approval
8.01(b) All corporate powers shall be exercised by or under the authority of the board of directors of the corporation, and the business and affairs of the corporation shall be managed by or under the direction, and subject to the oversight, of its board
MBCA- buyer SH no vote
No buyer’s SH vote required unless shares diluted by more than 20%. § 6.21(f)(1).
MBCA- seller board approval
§12.02(b) A disposition that requires approval of the shareholders under subsection (a) shall be initiated by a resolution by the board of directors
MBCA- seller SH
MBCA §12.01 No approval of the shareholders of a corporation is required, unless the articles of incorporation otherwise provide: (1) to sell, lease, exchange, or otherwise dispose of any or all of the corporation’s assets in the usual and regular course of business .
§12.02(a) A sale, lease, exchange, or other disposition of assets, other than a distribution described in 12.01, requires approval of the corporation’s shareholders if the disposition would leave the corporation without a significant continuing business activity.
If a corporation retains a business activity that represents at least 25% of total assets at the end of the most recently completed fiscal year and 25% of either income from continuing operations before taxes or revenues from continuing operations for that fiscal year, the corporation will be conclusively deemed to have retained a significant continuing business activity.
Merger procedures
Alpha creates Shell subsidiary, paying $1 for 1 share of Shell.
Beta merges into Shell. This requires vote of Beta SHs and Shell SHs, which are Alpha bd. members.
Alpha does a MBCA § 11.05 short form merger of Shell into itself. No Alpha SH vote. Only Alpha board approval needed.
MBCA Target & Acquiring Board approval
§11.04 In the case of a domestic corporation that is a party to a merger or share exchange: (a) the plan of merger or share exchange must be adopted by the board of directors.
MBCA Acquiring SH approval
Approval required
No vote under § 11.04(g) Whale/Minnow, the Acquiring corporation will survive.
vote is required under §6.21(f) if diluted more than 20%
Look at § 7.25(c) requiring maj. shares of those voting for/against, if quorum exists
MBCA Target SH approval
SH vote required
§11.04 In the case of a domestic corporation that is a party to a merger or share exchange (e) approval of the plan of...
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Business Association Outline for Professor Cox from Duke Law...
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