CHAPTER 12
Management and Control of the Corporation
Replace section "D. ACTION BY SHAREHOLDERS"
from pages 368-378 with the following:
D. ACTION BY SHAREHOLDERS
6. SUMMARY
In short, these basic techniques (and numerous combinations
and permutations of them) can be used to combine under the control of
one management group the business operations of two or more corporations.
If stock of P (the surviving corporation) is the only consideration to
be paid to the shareholders of T (the acquired corporation) each technique
will result in the former shareholders of P and T emerging as the shareholders
of P, and in P emerging as the owner, directly or through a wholly owned
subsidiary, of its assets and the assets of T. As
suggested by the following charts, the voting and appraisal rights of
the shareholders of P and T under the pre-1999 RMBCA and DGCL often
turn on the form of the combination, even though each form achieves
essentially an identical result. The revised RMBCA seeks to avoid form
over substance, by creating consistent voting and appraisal rights regardless
of the form. The charts assume a stock-for-stock business combination
of equals in which P has sufficient previously authorized shares to
acquire T:
P (surviving
T (acquired
corporation)
corporation)
| RMBCA (pre-1999 version) |
Vote |
Appraisal |
Vote |
Appraisal |
| Statutory Merger |
Yes
§ 11.03 |
No
§ 13.02 |
Yes
§ 11.03 |
Yes
§ 13.02 |
| Triangular Merger |
No |
No |
Yes
§ 11.03 |
Yes
§ 13.02 |
| Statutory Share Exchange |
No
§ 11.03 |
No
§ 13.02 |
Yes
§ 11.03 |
Yes
§ 13.02 |
| Purchase of Assets |
No |
No |
Yes
§ 12.02 |
Yes
§ 13.02 |
All votes by absolute majority of shares entitled
to vote.
P (surviving
T (acquired
corporation)
corporation)
| RMBCA (1999 version) |
Vote |
Appraisal |
Vote |
Appraisal |
| Statutory Merger |
Yes*
§ 11.04 |
No
§ 13.02 |
Yes
§ 11.04 |
Yes**
§ 13.02 |
| Triangular Merger |
Yes* |
No
§ 13.02 |
Yes
§ 11.04 |
Yes**
§ 13.02 |
| Statutory Share Exchange |
Yes*
§ 11.04 |
No
§ 13.02 |
Yes
§ 11.04 |
Yes**
§ 13.02 |
| Purchase of Assets |
Yes* |
No
§ 13.02 |
Yes
§ 12.02 |
Yes**
§ 13.02 |
All vote by simple majority. Separate voting
by voting groups, except for purchase of assets.
* Assuming a dilutive share issuance - transaction involves
issuance of P shares comprising more than 20% of P's pre-issuance
shares. RMBCA § 6.21(f).
** No, if market exception applies -- that is, shares
of T are publicly traded before merger, unless T shareholders receive
non-marketable shares or merger is conflict transaction. RMBCA §
13.02(b).
P (surviving
T (acquired
corporation)
corporation)
| Del. Gen. Corp. L. |
Vote |
Appraisal |
Vote |
Appraisal |
| Statutory Merger |
Yes
§ 251 |
No
§ 262*** |
Yes
§ 251 |
Yes
§ 262*** |
| Triangular Merger |
No |
No |
Yes
§ 251 |
Yes
§ 262*** |
| Statutory Share Exchange |
N.A. |
N.A. |
N.A. |
N.A. |
| Purchase of Assets |
No |
No |
Yes
§ 271 |
No |
All votes by absolute majority.
*** No, if market-out exception applies -- that is,
shares are publicly traded before and after merger. DGCL §
252(b)(1).
|
