Corporate Reorganizations

Chapter 12 of Division 1 of Title 1 of the Corporations Code deals with general corporate reorganizations. Section 1200 requires a reorganization or a share exchange tender offer is to be approved by the board of five specified types of entities.

Section 1201 requires that the principal terms of a reorganization to be approved by the outstanding shares of each class of each corporation the approval of whose board is required, with exceptions. Two classes of common shares differing only as to voting rights are considered as a single class of shares.

Section 1201.5 provides that the principal terms of a share exchange tender offer must be approved by the outstanding shares of each class of the corporation making the tender offer or whose shares are to be used in the tender offer, if the rights, preferences, privileges, and restrictions granted to or imposed upon that class of shares remain unchanged.

Section 1202 sets forth that the principal terms of a merger reorganization are to be approved by all the outstanding shares of a corporation if the agreement of merger provides that all the outstanding shares of that corporation are canceled without consideration in the merger.

Section 1203 states that, if a tender offer, including a share exchange tender offer, or a written proposal for approval of a reorganization or for a sale of assets is made to some or all of a corporation’s shareholders by an interested party, an affirmative opinion in writing as to the fairness of the consideration to the shareholders of that corporation is to be delivered as specified in five provisions of this section.