Merger and Consolidation in Corporation Law

Merger and Consolidation

• Two or more corporations can merge into a single corporation, which can be one of the constituent corporations or a new corporation.
• The board of directors or trustees of each corporation must approve a plan of merger or consolidation, which includes:
  • The names of the constituent corporations
  • The terms of the merger or consolidation and how it will be carried out
  • A statement of changes to the articles of incorporation of the surviving corporation (in case of merger)
  • Statements required for articles of incorporation in case of consolidation
  • Other necessary or desirable provisions

Stockholders' or Members' Approval

• The plan of merger or consolidation must be approved by a majority vote of each board of directors or trustees
• The plan is then submitted for approval by stockholders or members at separate corporate meetings
• Notice of the meetings must be given to all stockholders or members, including a copy or summary of the plan
• The affirmative vote of at least two-thirds (2/3) of the outstanding capital stock or members is required for approval
• Dissenting stockholders may exercise the right of appraisal, unless the board of directors decides to abandon the plan

Amendments to the Plan

• Amendments to the plan may be made with the approval of a majority vote of the respective boards of directors or trustees and ratified by the affirmative vote of at least two-thirds (2/3) of the outstanding capital stock or members

Articles of Merger or Consolidation

• After stockholder or member approval, articles of merger or consolidation must be executed by each constituent corporation
• The articles must include:
  • The plan of merger or consolidation
  • Number of shares outstanding or number of members
  • Number of shares or members voting for or against the plan
  • Carrying amounts and fair values of assets and liabilities as of the agreed cut-off date
  • Method to be used in merging or consolidating accounts
  • Provisional or pro forma values, accounting method, and other prescribed information

Effectivity of Merger or Consolidation

• The articles of merger or consolidation, signed and certified, shall be filed with the Commission
• The merger or consolidation shall take effect upon the filing of the articles