Texas Business Organizations Code 22.252 – Approval of Sale of All or Substantially All of Assets
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(a) A corporation must approve the sale of all or substantially all of its assets by complying with this section.
(b) If the corporation has no members or has no members with voting rights, the sale of all or substantially all of the assets of the corporation must be authorized by the vote of directors required by § 22.164.
Terms Used In Texas Business Organizations Code 22.252
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Certificate of formation: means :
(A) the document required to be filed with the filing officer under Chapter 3 to form a filing entity; and
(B) if appropriate, a restated certificate of formation and all amendments of an original or restated certificate of formation. See Texas Business Organizations Code 1.002 - Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Corporation: means an entity governed as a corporation under Title 2 or 7. See Texas Business Organizations Code 1.002
- Deed: The legal instrument used to transfer title in real property from one person to another.
- Domestic: means , with respect to an entity, that the entity is formed under this code or the entity's internal affairs are governed by this code. See Texas Business Organizations Code 1.002
- Insolvent: means a person who is unable to pay the person's debts as they become due in the usual course of business or affairs. See Texas Business Organizations Code 1.002
- Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Property: includes tangible and intangible property and an interest in that property. See Texas Business Organizations Code 1.002
(c) If the management of the affairs of the corporation is vested in its members under § 22.202, a resolution authorizing a sale of all or substantially all of the assets of the corporation:
(1) must be submitted to a vote at an annual, regular, or special meeting of the members; and
(2) must be approved by the members by the vote required by § 22.164.
(d) If the corporation has members with voting rights:
(1) the board of directors of the corporation must adopt a resolution that:
(A) recommends the sale; and
(B) directs that the resolution be submitted to a vote at an annual or special meeting of the members having voting rights; and
(2) the members must approve the resolution by the vote required by § 22.164.
(e) At the meeting required by Subsection (c) or (d), in addition to approving the resolution authorizing the sale, the members may set, or authorize the board of directors to set, the terms and conditions of the sale and the consideration to be received by the corporation for the sale by the same vote of members.
(f) After the members authorize a sale under Subsection (d), the board of directors may abandon the sale, subject to the rights of third parties under any contracts relating to the sale, without further action or approval by members.
(g) Notwithstanding Subsection (d), if a corporation is insolvent, a sale of all or substantially all of the assets of the corporation may be authorized on receiving the affirmative vote of the majority of the directors in office.
(h) The phrase “sale of all or substantially all of the assets” means the sale, lease, exchange, or other disposition, other than a pledge, mortgage, deed of trust, or trust indenture unless otherwise provided by the certificate of formation, of all or substantially all of the property and assets of a domestic corporation that is not made in the usual and regular course of the corporation’s activities without regard to whether the disposition is made with the goodwill of the corporation’s activities. The term does not include a transaction that results in the corporation directly or indirectly:
(1) continuing to engage in one or more activities; or
(2) applying a portion of the consideration received in connection with the transaction to the conduct of an activity that the corporation engages in after the transaction.