CHAPTER 12. Reorganizations [1200. - 1203.]

Cal. Corporations Code - CORP 12.

in effect

Cal. Corporations Code - CORP § 1200. Section 1200.

A reorganization (Section 181) or a share exchange tender offer (Section 183.5) shall be approved by the board of: (a) Each constituent corporation in a merger reorganization; (b) The acquiring corporation in an exchange reorganization; (c) The acquiring corporation and the corporation whose property and assets are acquired in a sale-of-assets reorganization; (d) The acquiring corporation in a share exchange tender offer (Section 183.5); and (e) The corporation in control of any constituent or acquiring domestic or foreign corporation or other business entity under subdivision (a), (b) or (c) and whose equity securities are issued, transferred, or exchanged in the reorganization (a “parent party”).

Cal. Corporations Code - CORP § 1201. Section 1201.

(a) The principal terms of a reorganization shall be approved by the outstanding shares (Section 152) of each class of each corporation the approval of whose board is required under Section 1200, except as provided in subdivision (b) and except that (unless otherwise provided in the articles) no approval of any class of outstanding preferred shares of the surviving or acquiring corporation or parent party shall be required if the rights, preferences, privileges, and restrictions granted to or imposed upon that class of shares remain unchanged (subject to the provisions of subdivision (c)). For the purpose of this subdivision, two classes of common shares differing only as to voting rights shall be considered as a single class of shares. (b) No approval of the outstanding shares (Section 152) is required by subdivision (a) in the case of any corporation if that corporation, or its shareholders immediately before the reorganization, or both, shall own (immediately after the reorganization) equity securities, other than any warrant or right to subscribe to or purchase those equity securities, of the surviving or acquiring corporation or a parent party (subdivision (e) of Section 1200) possessing more than five-sixths of the voting power of the surviving or acquiring corporation or parent party. In making the determination of ownership by the shareholders of a corporation, immediately after the reorganization, of equity securities pursuant to the preceding sentence, equity securities which they owned immediately before the reorganization as shareholders of another party to the transaction shall be disregarded. For the purpose of this section only, the voting power of a corporation shall be calculated by assuming the conversion of all equity securities convertible (immediately or at some future time) into shares entitled to vote but not assuming the exercise of any warrant or right to subscribe to or purchase those shares. (c) Notwithstanding subdivision (b), the principal terms of a reorganization shall be approved by the outstanding shares (Section 152) of the surviving corporation in a merger reorganization if any amendment is made to its articles that would otherwise require that approval. (d) Notwithstanding subdivision (b), the principal terms of a reorganization shall be approved by the outstanding shares (Section 152) of any class of a corporation that is a party to a merger or sale-of-assets reorganization if holders of shares of that class receive shares of the surviving or acquiring corporation or parent party having different rights, preferences, privileges, or restrictions than those surrendered. Shares in a foreign corporation received in exchange for shares in a domestic corporation have different rights, preferences, privileges, and restrictions within the meaning of the preceding sentence. (e) Notwithstanding subdivisions (a) and (b), the principal terms of a reorganization shall be approved by the affirmative vote of at least two-thirds of each class, or a greater vote if required in the articles, of the outstanding shares (Section 152) of any close corporation if the reorganization would result in their receiving shares of a corporation that is not a close corporation. However, the articles may provide for a lesser vote, but not less than a majority of the outstanding shares of each class. (f) Notwithstanding subdivisions (a) and (b), the principal terms of a reorganization shall be approved by at least two-thirds of each class, or a greater vote if required in the articles, of the outstanding shares (Section 152) of a corporation that is a party to a merger reorganization if holders of shares receive shares of a surviving social purpose corporation in the merger. (g) Notwithstanding subdivisions (a) and (b), the principal terms of a reorganization shall be approved by the outstanding shares (Section 152) of any class of a corporation that is a party to a merger reorganization if holders of shares of that class receive interests of a surviving other business entity in the merger. (h) Notwithstanding subdivisions (a) and (b), the principal terms of a reorganization shall be approved by all shareholders of any class or series if, as a result of the reorganization, the holders of that class or series become personally liable for any obligations of a party to the reorganization, unless all holders of that class or series have the dissenters’ rights provided in Chapter 13 (commencing with Section 1300). (i) Any approval required by this section may be given before or after the approval by the board. Notwithstanding approval required by this section, the board may abandon the proposed reorganization without further action by the shareholders, subject to the contractual rights, if any, of third parties.

Cal. Corporations Code - CORP § 1201.5. Section 1201.5.

(a) The principal terms of a share exchange tender offer (Section 183. 5) shall be approved by the outstanding shares (Section 152) of each class of the corporation making the tender offer or whose shares are to be used in the tender offer, except as provided in subdivision (b) and except that (unless otherwise provided in the articles) no approval of any class of outstanding preferred shares of either corporation shall be required, if the rights, preferences, privileges, and restrictions granted to or imposed upon that class of shares remain unchanged. For the purpose of this subdivision, two classes of common shares differing only as to voting rights shall be considered as a single class of shares. (b) No approval of the outstanding shares (Section 152) is required by subdivision (a) in the case of any corporation if the corporation, or its shareholders immediately before the tender offer, or both, shall own (immediately after the completion of the share exchange proposed in the tender offer) equity securities, (other than any warrant or right to subscribe to or purchase the equity securities), of the corporation making the tender offer or of the corporation whose shares were used in the tender offer, possessing more than five-sixths of the voting power of either corporation. In making the determination of ownership by the shareholders of a corporation, immediately after the tender offer, of equity securities pursuant to the preceding sentence, equity securities which they owned immediately before the tender offer as shareholders of another party to the transaction shall be disregarded. For the purpose of this section only, the voting power of a corporation shall be calculated by assuming the conversion of all equity securities convertible (immediately or at some future time) into shares entitled to vote but not assuming the exercise of any warrant or right to subscribe to, or purchase, shares.

Cal. Corporations Code - CORP § 1202. Section 1202.

(a) In addition to the requirements of Section 1201, the principal terms of a merger reorganization shall 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. (b) In addition to the requirements of Section 1201, if the terms of a merger reorganization or sale-of-assets reorganization provide that a class or series of preferred shares is to have distributed to it a lesser amount than would be required by applicable article provisions, the principal terms of the reorganization shall be approved by the same percentage of outstanding shares of that class or series which would be required to approve an amendment of the article provisions to provide for the distribution of that lesser amount. (c) If a parent party within the meaning of Section 1200 is a foreign corporation (other than a foreign corporation to which subdivision (a) of Section 2115 is applicable), any requirement or lack of a requirement for approval by the outstanding shares of the foreign corporation shall be based, not on the application of Sections 1200 and 1201, but on the application of the laws of the state or place of incorporation of the foreign corporation.

Cal. Corporations Code - CORP § 1203. Section 1203.

(a) If a tender offer, including a share exchange tender offer (Section 183.5), or a written proposal for approval of a reorganization subject to Section 1200 or for a sale of assets subject to subdivision (a) of Section 1001 is made to some or all of a corporation’s shareholders by an interested party (herein referred to as an “Interested Party Proposal”), an affirmative opinion in writing as to the fairness of the consideration to the shareholders of that corporation shall be delivered as follows: (1) If no shareholder approval or acceptance is required for the consummation of the transaction, the opinion shall be delivered to the corporation’s board of directors not later than the time that consummation of the transaction is authorized and approved by the board of directors. (2) If a tender offer is made to the corporation’s shareholders, the opinion shall be delivered to the shareholders at the time that the tender offer is first made in writing to the shareholders. However, if the tender offer is commenced by publication and tender offer materials are subsequently mailed or otherwise distributed to the shareholders, the opinion may be omitted in that publication if the opinion is included in the materials distributed to the shareholders. (3) If a shareholders’ meeting is to be held to vote on approval of the transaction, the opinion shall be delivered to the shareholders with the notice of the meeting (Section 601). (4) If consents of all shareholders entitled to vote are solicited in writing (Section 603), the opinion shall be delivered at the same time as that solicitation. (5) If the consents of all shareholders are not solicited in writing, the opinion shall be delivered to each shareholder whose consent is solicited prior to that shareholder’s consent being given, and to all other shareholders at the time they are given the notice required by subdivision (b) of Section 603. For purposes of this section, the term “interested party” means a person who is a party to the transaction and (A) directly or indirectly controls the corporation that is the subject of the tender offer or proposal, (B) is, or is directly or indirectly controlled by, an officer or director of the subject corporation, or (C) is an entity in which a material financial interest (subdivision (a) of Section 310) is held by any director or executive officer of the subject corporation. For purposes of the preceding sentence, “any executive officer” means the president, any vice president in charge of a principal business unit, division, or function such as sales, administration, research, development, or finance, and any other officer or other person who performs a policymaking function or has the same duties as those of a president or vice president. The opinion required by this subdivision shall be provided by a person who is not affiliated with the offeror and who, for compensation, engages in the business of advising others as to the value of properties, businesses, or securities. The fact that the opining person previously has provided services to the offeror or a related entity or is simultaneously engaged in providing advice or assistance with respect to the proposed transaction in a manner which makes its compensation contingent on the success of the proposed transaction shall not, for those reasons, be deemed to affiliate the opining person with the offeror. Nothing in this subdivision shall limit the applicability of the standards of review of the transaction in the event of a challenge thereto under Section 310 or subdivision (c) of Section 1312. This subdivision shall not apply to an Interested Party Proposal if the corporation that is the subject thereof does not have shares held of record by 100 or more persons (determined as provided in Section 605), or if the transaction has been qualified under Section 25113 or 25121 and no order under Section 25140 or subdivision (a) of Section 25143 is in effect with respect to that qualification. (b) If a tender of shares or a vote or written consent is being sought pursuant to an Interested Party Proposal and a later tender offer or written proposal for a reorganization subject to Section 1200 or sale of assets subject to subdivision (a) of Section 1001 that would require a vote or written consent of shareholders is made to the corporation or its shareholders (herein referred to as a “Later Proposal”) by any other person at least 10 days prior to the date for acceptance of the tendered shares or the vote or notice of shareholder approval on the Interested Party Proposal, then each of the following shall apply: (1) The shareholders shall be informed of the Later Proposal and any written material provided for this purpose by the later offeror shall be forwarded to the shareholders at that offeror’s expense. (2) The shareholders shall be afforded a reasonable opportunity to withdraw any vote, consent, or proxy previously given before the vote or written consent on the Interested Party Proposal becomes effective, or a reasonable time to withdraw any tendered shares before the purchase of the shares pursuant to the Interested Party Proposal. For purposes of this subdivision, a delay of 10 days from the notice or publication of the Later Proposal shall be deemed to provide a reasonable opportunity or time to effect that withdrawal.

Source: CA Legislative Counsel Bulk DataURL: https://downloads.leginfo.legislature.ca.gov/pubinfo_2025.zipFetched: 6/27/2026