July 1, 2022

Volume XII, Number 182

Advertisement
Advertisement

July 01, 2022

Subscribe to Latest Legal News and Analysis

June 30, 2022

Subscribe to Latest Legal News and Analysis

June 29, 2022

Subscribe to Latest Legal News and Analysis

When Merging What Must The Board And Shareholders Approve?

The California General Corporation Law recognizes three subsets of a "reorganization" - a "merger reorganization", an "exchange reorganization", or "sale-of-assets reorganization".  Cal. Corp. Code § 181.  Chapter 11 of the GCL authorizes and specifies the procedures and effects of mergers.  Chapter 12 concerns the board and shareholder approval requirements pertaining to reorganizations.  

In the case of a merger, Section 1101 requires the board of each corporation that desires to merger to approve an "agreement of merger" and specifies the content of the agreement.  Somewhat inconsistently, Section 1200 specifies only that the board of each constituent corporation in a merger reorganization must approve the "reorganization".  Sections 1201 and 1202 specify the circumstances when shareholder approval of a reorganization is required.  Unless an exception is available, these statutes requires the approval not of the agreement of merger or the reorganization, but of its "principal terms".   

It is interesting to compare these provisions to Section 251(c) of the Delaware General Corporation Law which quite specifically requires that the agreement of merger be submitted to the stockholders.  

© 2010-2022 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XII, Number 48
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
Partner

Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

949-851-5428
Advertisement
Advertisement
Advertisement