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Corporations • Fundamental Corporate Changes
CORP#063
Legal Definition
First, there must be a resolution by the board at a valid meeting in order to recommend the change.
Second, there must be notice of a special meeting.
Third, there must be approval of a majority of shares entitled to vote and by a majority of each voting group adversely affected by the change—except that no shareholder approval is required for a short-form merger.
Fourth, a dissenting shareholder must have a right of appraisal, in which a shareholder not in favor of the change has a right to compel the corporation to buy his shares at fair value. Finally, the corporation must file notice with the state.
Second, there must be notice of a special meeting.
Third, there must be approval of a majority of shares entitled to vote and by a majority of each voting group adversely affected by the change—except that no shareholder approval is required for a short-form merger.
Fourth, a dissenting shareholder must have a right of appraisal, in which a shareholder not in favor of the change has a right to compel the corporation to buy his shares at fair value. Finally, the corporation must file notice with the state.
Plain English Explanation
First, the directors have to recommend the change. Second, the company has to let the shareholders know when and where a special meeting will be held about the change, and what the change is. Third, the change must get support from a majority of those it affects. For example, if the change was to eliminate the rights of Class A shareholders, then a majority of Class A shareholders would need to approve the change, in addition to a majority of all shareholders. Fourth, if a shareholder isn't happy with the change, they have the right to demand to be bought out by the company. Fifth, after the change, the company has to let the state know about it.
