Pennsylvania short form merger.Statement of Merger (PA) | Practical Law

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The amendments repeal many substantive provisions of the PBCL in respect of corporate mergers. An outline of the merger procedure for Pennsylvania corporations is attached as Annex A. The ETL incorporates existing concepts and procedures from the PBCL using a new vernacular and is designed to work consistently with merger procedures for other forms of business association. It is well known that Pennsylvania law contains extremely protective antitakeover provisions for public companies.

Specifically, under Section , a board may in the exercise of its fiduciary duties consider the effects of any action on shareholders, employees, suppliers and customers and is not required to consider any corporate interest or interests of any particular group as a controlling or dominant factor. Section expressly provides that no transaction may change the standard of care applicable to the board of directors under Subchapter B of Chapter 17 relating to fiduciary duties.

Section of the ETL permits a merging corporation to treat shareholders holding shares of the same class or series in a materially different manner. The plan must describe the type and extent of the special treatment authorized.

Alternatively, in lieu of the shareholder vote, such a plan may be authorized if a court of competent jurisdiction determines that the special treatment is undertaken in good faith, after reasonable deliberation and is in the best interest of the corporation. In addition, subsection b of Section provides that, unless the board determines to permit the members of the affected group to exercise dissenters rights, each group of holders who are to receive the same special treatment under the plan are entitled to vote as a special class whether or not they are entitled to voting rights under the articles of incorporation or bylaws.

The Committee Comments to Section provide a good example of how the statutory provision may be implemented in practice:. Where, for example, holders of shares of a class or series are allotted a new fixed rate preferred interest unless they are employees, in which case they may elect to receive instead an earn-out variable face amount security, there will be two groups within the meaning of subsection b : 1 the employee holders and 2 all other holders of the class or series.

Subsection b will be applicable separately to each group, and the [board of directors] could, for example, provide for a separate vote by group 1 thus depriving them of dissenters rights and no separate vote for group 2 thus according them dissenters rights. The simplicity of the example belies the potential for abuse of the reclassification power for more questionable purposes. However, it is not difficult to imagine circumstances in which the constituency law discussed above could be invoked to justify disparate treatment that may, in the view of the affected group at least, result in fundamental unfairness to one group of shareholders.

The Committee Comment to Section clarifies that the initial approval of a plan by a board of directors is sufficient to satisfy the board approval requirement and that approval does not have to be refreshed at the time of approval of the plan by the shareholders.

Under Section a of the PBCL, approval of a plan of merger requires the affirmative vote of a majority of the votes cast by all shareholders entitled to vote on the proposal. Both these sections are being repealed but the same voting and ownership thresholds are retained by Sections c and d ii of the ETL.

Under Section b of the PBCL, action may be taken by written consent of less than all of the shareholders entitled to vote on a proposal if the bylaws expressly provide for such action. However, while written consents potentially afford the opportunity for Pennsylvania corporations to avoid the expense and delay of shareholder meetings, in the case of private companies much of the timing advantage is currently eroded by Section c of the PBCL which provides that any action taken by partial written consent does not become effective until after at least ten days’ notice of the action has been given to each shareholder entitled to vote but who did not consent in writing.

Except in these cases, actions approved by partial written consent may become effective immediately but notice must be given promptly to each shareholder entitled to vote that has not consented. Existing law already permits a corporation to provide in its bylaws or by separate resolution for shareholders to exercise dissenters rights in a transaction to which they are not otherwise entitled. Where a Pennsylvania corporation is merged into a foreign entity that is not registered to do business in Pennsylvania, the parties must obtain tax clearance certificates from the Department of Revenue and the Department of Labor and Industry evidencing payment by the merged corporation of all Pennsylvania state taxes and include the certificates with the merger filing.

Obtaining such certificates takes many months. A new provision has been added to Section of the Code that exempts the parties from the requirement to obtain tax clearance certificates if the foreign entity that survives the merger registers to do business in Pennsylvania simultaneously with the delivery of the statement of merger. A Pennsylvania corporation may become a party to a merger by approving a plan of merger.

This section prescribes the information and terms that must be included in the plan of merger. This subchapter describes the fiduciary relationship of directors to the corporation and articulates factors that directors may take into account in their decision-making as well as presumptions that apply when their conduct is evaluated.

These sections contain antitakeover provisions applicable to Pennsylvania registered corporations that have not opted out of the statutory protections. These sections cover the manner in which the plan of merger must be approved by the corporation, including the proposal of the plan of merger by the board of directors, the notice of a shareholders meeting, the shareholder vote required to adopt the plan of merger, the circumstances under which shareholder adoption of the plan of merger is not required, the conditions for holding company mergers and the availability of dissenters rights.

These subchapters contain rules in respect of the manner of notice, time, place and notice requirements for a meeting called to adopt a plan of merger, quorum, the voting rights of shareholders generally, determining shareholders of record, voting lists and taking action by written consent in lieu of meeting.

This section prescribes the terms that must be included in the statement of merger that is filed with the Pennsylvania Department of State and when the merger becomes effective.

These sections set forth for the procedure for the exercise of dissenters rights by eligible shareholders. Patterson, Thomas M. Thompson and Adam G. Wicks in Law , December 4, However, the focus of this Note should not obscure that the value and benefits of the ETL derive in large part from the fact that the statute consolidates and simplifies a set of procedures across different forms of business association and contains provisions to accomplish five fundamental kinds of transactions mergers, conversions, interest exchanges, divisions and domestications.

The provisions of the Business Corporation Law and the organic rules of the business corporation will apply as appropriate with respect to issues not dealt with in this section, such as how far in advance of a meeting notice must be given, quorum requirements for meetings, action by consent without a meeting, etc. A registered corporation may opt out of the antitakeover provisions by appropriate amendments to its articles of incorporation.

The new law is based on the provision contained in current Section of the PBCL which became effective in September See more ». This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.

Paul DeRosa. To embed, copy and paste the code into your website or blog:. Relationship to Antitakeover Law It is well known that Pennsylvania law contains extremely protective antitakeover provisions for public companies. The Committee Comments to Section provide a good example of how the statutory provision may be implemented in practice: Where, for example, holders of shares of a class or series are allotted a new fixed rate preferred interest unless they are employees, in which case they may elect to receive instead an earn-out variable face amount security, there will be two groups within the meaning of subsection b : 1 the employee holders and 2 all other holders of the class or series.

Voting Requirements and Short Form Merger Under Section a of the PBCL, approval of a plan of merger requires the affirmative vote of a majority of the votes cast by all shareholders entitled to vote on the proposal. Partial Written Consent of Shareholders in Lieu of Meeting Under Section b of the PBCL, action may be taken by written consent of less than all of the shareholders entitled to vote on a proposal if the bylaws expressly provide for such action.

Tax Clearance Where a Pennsylvania corporation is merged into a foreign entity that is not registered to do business in Pennsylvania, the parties must obtain tax clearance certificates from the Department of Revenue and the Department of Labor and Industry evidencing payment by the merged corporation of all Pennsylvania state taxes and include the certificates with the merger filing.

Send Print Report. C Attorney Advertising. Published In: Amended Regulation. Complex Corporate Transactions. Corporations Code. Limited Partnerships. Shareholder Rights. Voting Rights. Written Consent. Business Organization. International Trade. C on:. Sign Up Log in.

Plan of Merger A Pennsylvania corporation may become a party to a merger by approving a plan of merger. Fiduciary Duty This subchapter describes the fiduciary relationship of directors to the corporation and articulates factors that directors may take into account in their decision-making as well as presumptions that apply when their conduct is evaluated. Registered Corporations These sections contain antitakeover provisions applicable to Pennsylvania registered corporations that have not opted out of the statutory protections.

Approval of Plan of Merger These sections cover the manner in which the plan of merger must be approved by the corporation, including the proposal of the plan of merger by the board of directors, the notice of a shareholders meeting, the shareholder vote required to adopt the plan of merger, the circumstances under which shareholder adoption of the plan of merger is not required, the conditions for holding company mergers and the availability of dissenters rights.

Notice and Meetings Generally and Shareholders These subchapters contain rules in respect of the manner of notice, time, place and notice requirements for a meeting called to adopt a plan of merger, quorum, the voting rights of shareholders generally, determining shareholders of record, voting lists and taking action by written consent in lieu of meeting.

Statement of Merger This section prescribes the terms that must be included in the statement of merger that is filed with the Pennsylvania Department of State and when the merger becomes effective. Effects of Merger This section describes the effects of the merger on the parties to the merger. Dissenters Rights These sections set forth for the procedure for the exercise of dissenters rights by eligible shareholders.

 
 

 

– Title 15 – CORPORATIONS AND UNINCORPORATED ASSOCIATIONS

 

TITLE PART I. Chapter 1. General Provisions. Subchapter A. Preliminary Provisions. Short title and application of title.

Subordination of title to regulatory laws. Equitable remedies. Effect of filing papers required to be filed. Form of records. Change in location or status of registered office provided by agent. Name of commercial registered office provider in lieu of registered address.

Supplementary general principles of law applicable. Receipt of electronic communications. Delivery of document. Defense of usury.

Subchapter B. Functions and Powers of Department of State. Application of subchapter. Functions of Department of State. Powers of Department of State. Docketing statement. Requirements to be met by filed documents. Processing of documents by Department of State. Court to pass upon rejection of documents by Department of State.

Statement of correction. Tax clearance of certain fundamental transactions. Custody and management of orphan corporate and business records. Abandonment of filing before effectiveness.

Effect of signing filings. Liability for inaccurate information in filing. Signing and filing pursuant to judicial order. Subsistence certificate. Subchapter C. Short title and application of subchapter. Fee schedule. Enforcement and collection. Disposition of funds. Subchapter D. Domestication of Certain Alien Associations. Domestication of certain alien associations. Contingent domestication of certain alien associations Repealed.

Chapter 2. Entities Generally. Requirements for names generally. Corporation names. Partnership and limited liability company names. Business trust names. Requirements for foreign association names. Required name changes by senior associations. Reservation of name. Registration of name of nonregistered foreign association. Chapter 3. Entity Transactions. Short title of chapter. Relationship of chapter to other provisions of law.

Regulatory conditions and required notices and approvals. Nature of transactions. Contents of plan. Contractual dissenters rights in entity transactions. Excluded entities and transactions. Party to plan or transaction.

Submission of matters to interest holders. Approval of Entity Transactions. Approval by business corporation. Approval by nonprofit corporation. Approval by general partnership. Approval by limited partnership. Approval by limited liability company. Approval by professional association.

Approval by business trust. Approval by unincorporated nonprofit association. Special treatment of interest holders. Alternative means of approval of transactions. Merger authorized. Plan of merger. Approval of merger. Amendment or abandonment of plan of merger. Statement of merger; effectiveness.

Effect of merger. Interest Exchange. Interest exchange authorized. Plan of interest exchange. Approval of interest exchange. Amendment or abandonment of plan of interest exchange. Statement of interest exchange; effectiveness. Effect of interest exchange. Subchapter E. Conversion authorized. Plan of conversion. Approval of conversion. Amendment or abandonment of plan of conversion.

Statement of conversion; effectiveness. Effect of conversion. Subchapter F. Division authorized. Plan of division. Approval of division.

 
 

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