SB 1186

Bill Subjects

Abstract

Existing provisions of law provide for the merger of 2 or more corporations by approval of the board of each corporation of an agreement of merger. Existing law requires that the agreement contain the manner of converting the shares of each of the constituent corporations into shares or other securities of the surviving corporation, as specified. Existing law specifies that the nonredeemable common shares or nonredeemable equity securities of a constituent corporation may be converted only into nonredeemable common shares of the surviving party or a parent party if, prior to the merger, a constituent corporation or its parent owns, directly or indirectly, shares of another constituent corporation representing more than 50 percent of the voting power of the other constituent corporation, unless all of the shareholders of the class in the first constituent corporation consent, as specified. Existing law exempts a short-form merger and the merger of a corporation into a specified subsidiary from this requirement. This bill would repeal the latter exemption. The bill would also require that the nonredeemable common shares or nonredeemable equity securities of a constituent corporation be converted only into nonredeemable common shares of the surviving party or a parent party if, prior to the execution of the agreement of merger, a constituent corporation or its parent owns, directly or indirectly, shares of another constituent corporation representing more than 50 percent of the voting power of the other constituent corporation, unless the majority of the holders of outstanding shares of the class in the first constituent corporation consent, as specified.