Corporate Mergers

Title 1, Division 1, Chapter 11 deals with mergers in California under the general corporation law.

Section 1100 provides that any two or more corporations may be merged into one of those corporations. A corporation may merge with one or more domestic corporations, social purpose corporations, foreign corporations, or other business entities pursuant to this chapter.

Section 1101 requires the board of each corporation that desires to merge is to approve an agreement of merger. The constituent corporations are parties to the agreement of merger and other persons, including a parent party, may be parties to the agreement of merger. The agreement must state all five specified items.

Section 1102 requires each corporation to sign the agreement by its chairperson of the board, president or a vice president and secretary or an assistant secretary acting on behalf of their respective corporations.

Section 1103 explains that, after approval of a merger by the board and any approval of the outstanding shares, the surviving corporation is required to file a copy of the agreement of merger with an officers’ certificate of each constituent corporation attached stating specified information.

Section 1104 provides that any amendment to the agreement may be adopted and the agreement amended may be approved by the board and, if it changes any of the principal terms of the agreement, by the outstanding shares of any constituent corporation in the same manner as the original agreement.

Section 1105 allows the board to abandon a merger, subject to the contractual rights, if any, of third parties, including other constituent corporations, without further approval by the outstanding shares at any time before the merger is effective.

Section 1106 says that a copy of an agreement of merger certified on or after the effective date by an official having custody thereof has the same force in evidence as the original and, except as against the state, is conclusive evidence of the performance of all conditions precedent to the merger.

Section 1107 states that, upon merger pursuant to this chapter the separate existence of the disappearing corporations ceases and the surviving corporation succeeds, without other transfer, to all the rights and property of each of the disappearing corporations and be subject to all the debts and liabilities of each in the same manner as if the surviving corporation had itself incurred them.

Section 1107.5 says that, upon merger pursuant to this chapter, a surviving domestic or foreign corporation or other business entity is deemed to have assumed the liability of each disappearing domestic or foreign corporation or other business entity that is taxed for two specified actions.

Section 1108 provides that the merger of any number of domestic corporations with any number of foreign corporations may be effected if the foreign corporations are authorized by the laws under which they are formed to effect the merger. The surviving corporation may be any one of the constituent corporations and continue to exist under the laws of the state or place of its incorporation.

Section 1109 states that, whenever a domestic or foreign corporation or domestic or foreign other business entity having any real property in this state merges or consolidates with another domestic or foreign corporation or other business entity pursuant to the laws of this state.

Section 1110 provides that, if a domestic corporation owns all the outstanding shares, or owns less than all the outstanding shares but at least 90 percent of the outstanding shares of each class, of a corporation or corporations, domestic or foreign, may be effected by a resolution or plan of merger adopted and approved by the board of the parent corporation and the filing of a certificate of ownership.

Section 1111 provides that, if any disappearing corporation in a merger is a close corporation and the surviving corporation is not a close corporation, the merger must be approved by the affirmative vote of at least two-thirds of each class of the outstanding shares of such disappearing corporation; provided.

Section 1112 states that, if a disappearing corporation in a merger is a corporation governed by this division and the surviving corporation is a nonprofit public benefit corporation, a nonprofit mutual benefit corporation, or a nonprofit religious corporation, the merger must be approved by all of the outstanding shares of all classes of the disappearing corporation.

Section 1112.5 provides that, if a disappearing corporation in a merger is a corporation governed by this division and the surviving corporation is a social purpose corporation, both of the specified actions apply.

Section 1113 states that any one or more corporations may merge with one or more other business entities. One or more domestic corporations not organized under this division and one or more foreign corporations may be parties to the merger. The merger of any number of corporations with any number of other business entities may be effected only if three specified conditions occur.