Nonprofit Mergers

Article 1 of Chapter 10 of Part 2 of Division 2 of Title 1 of the Corporations Code deals with mergers of nonprofit public benefit corporations.

Section 6010 authorizes a public benefit corporation may merge with any domestic corporation, foreign corporation, or other business entity. However, without the prior written consent of the Attorney General, a public benefit corporation may only merge with another public benefit corporation or a religious corporation or a foreign nonprofit corporation or an unincorporated association the governing documents of which provide that its assets are irrevocably dedicated to charitable, religious, or public purposes.

Section 6011 provides that the board of each corporation which desires to merge must approve an agreement of merger. The constituent corporations are to be parties to the agreement of merger and other persons may be parties to the agreement of merger. The agreement must set forth six specified items of information.

Section 6012 requires the principal terms of the merger to be approved by the members of each constituent corporation and by each other person or persons whose approval of an amendment of articles is required by the articles.

Section 6013 requires each constituent corporation to sign the agreement by the chairperson of its board, president or a vice president, and secretary or an assistant secretary acting on behalf of their respective corporations.

Section 6014 provides that, after approval of a merger by the board and any approval by the members or other person or persons, 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 6015 allows any amendment to the agreement to be adopted and the agreement so amended may be approved by the board and, if it changes any of the principal terms of the agreement, by the members of any constituent corporation in the same manner as the original agreement.

Section 6016 authorizes 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 members or other persons entitled to approve the merger at any time before the merger is effective.

Section 6017 provides that a copy of an agreement of merger certified on or after the effective date by an official having custody 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, the existence on the effective date of the surviving corporation and the performance of the conditions necessary to the adoption of any amendment to the articles contained in the agreement of merger.

Section 6018 states that the merger of any number of 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 must continue to exist under the laws of the state or place of its incorporation.

Section 6019 states that, if an agreement of merger is entered into between a nonprofit corporation and a business corporation, then specified provisions of law apply.

Section 6019.1 provides that any one or more corporations may merge with one or more other business entities. One or more other domestic corporations and foreign corporations  may be parties to the merger. Such a merger may be effected when three specified conditions are met.

Corporations Code Title 1, Division 2, Part 2, Chapter 10, Article 2 concerns mergers of nonprofit public benefit corporations. It contains provisions related to the effect of mergers.

Section 6020 provides that, upon merger pursuant to this chapter, the separate existences of the disappearing parties to the merger cease and the surviving party to the merger will succeed, without other transfer, to all the rights and property of each of the disappearing parties to the merger and be subject to all the debts and liabilities of each and trust obligations upon the property of a disappearing party in the same manner as if incurred by the surviving party to the merger.

Section 6020.5 states that, upon merger pursuant to this chapter, a surviving domestic or foreign corporation or other business entity must be deemed to have assumed the liability of each disappearing domestic or foreign corporation or other business entity that is taxed.

Section 6021 provides that, whenever a domestic or foreign corporation or other business entity having any real property in this state merges with another domestic or foreign corporation or other business entity pursuant to the laws of this state or of the state or place in which any constituent party to the merger was organized.

Section 6022 states that any bequest, devise, gift, grant, or promise contained in a will or other instrument of donation, subscription, or conveyance, which is made to a constituent corporation and which takes effect or remains payable after the merger, inures to the surviving party to the merger.