What is required for a merger to be effective in a typical corporate reorganization?

What is required for a merger to be effective in a typical corporate reorganization?

• A. Board adopts and majority SH approve
• B. Board adopts only
• C. Shareholders approve only
• D. No approval required

Answer: (A)

Mergers are approved through two steps: the board of directors adopts a plan of merger, and the shareholders vote to approve it. The board’s adoption shows the plan has been carefully evaluated and favored as a prudent course for the company, reflecting fiduciary duties to the corporation. The shareholders’ approval is needed because the merger changes ownership and control, affecting investors’ rights and the allocation of consideration. Typically, a majority of outstanding shares voting in favor is required, though some documents or laws may call for a supermajority. Once both approvals are obtained and any required filings or regulatory conditions are met, the merger becomes effective.

Mergers are approved through two steps: the board of directors adopts a plan of merger, and the shareholders vote to approve it. The board’s adoption shows the plan has been carefully evaluated and favored as a prudent course for the company, reflecting fiduciary duties to the corporation. The shareholders’ approval is needed because the merger changes ownership and control, affecting investors’ rights and the allocation of consideration. Typically, a majority of outstanding shares voting in favor is required, though some documents or laws may call for a supermajority. Once both approvals are obtained and any required filings or regulatory conditions are met, the merger becomes effective.