Section 10A-2A-12.02

Stockholder approval of certain dispositions.

(a) A sale, lease, exchange, or other disposition of assets, other than a disposition described in Section 10A-2A-12.01, requires approval of the corporation's stockholders if the disposition would leave the corporation without a significant continuing business activity. A corporation will conclusively be deemed to have retained a significant continuing business activity if it retains a business activity that represented, for the corporation and its subsidiaries on a consolidated basis, at least (i) 25 percent of total assets at the end of the most recently completed fiscal year, and (ii) either 25 percent of either income from continuing operations before taxes or 25 percent of revenues from continuing operations, in each case for the most recently completed fiscal year.

(b) To obtain the approval of the stockholders under subsection (a) the board of directors shall first adopt a resolution authorizing the disposition. The disposition shall then be approved by the stockholders. In submitting the disposition to the stockholders for approval, the board of directors shall recommend that the stockholders approve the disposition, unless (i) the board of directors makes a determination that because of conflicts of interest or other special circumstances it should not make a recommendation, or (ii) Section 10A-2A-8.26 applies. If either (i) or (ii) applies, the board of directors shall inform the stockholders of the basis for its so proceeding.

(c) The board of directors may set conditions for the approval by the stockholders of a disposition or the effectiveness of the disposition.

(d) If a disposition is required to be approved by the stockholders under subsection (a), and if the approval is to be given at a meeting, the corporation shall notify each stockholder, regardless of whether entitled to vote, of the meeting of stockholders at which the disposition is to be submitted for approval. The notice must state that the purpose, or one of the purposes, of the meeting is to consider the disposition and must contain a description of the disposition, including the terms and conditions of the disposition and the consideration to be received by the corporation.

(e) Unless the certificate of incorporation or the board of directors acting pursuant to subsection (c) requires a greater vote or a greater quorum, the approval of a disposition by the stockholders shall require the approval of the stockholders at a meeting at which a quorum exists consisting of a majority of the votes entitled to be cast on the disposition.

(f) After a disposition has been approved by the stockholders under this Article 12, and at any time before the disposition has been consummated, it may be abandoned by the corporation without action by the stockholders, subject to any contractual rights of other parties to the disposition.

(g) A disposition of assets in the course of dissolution under Article 14 is not governed by this section.

(h) For purposes of this section only, the property and assets of the corporation include the property and assets of any subsidiary of the corporation. As used in this subsection, "subsidiary" means any entity wholly owned and controlled, directly or indirectly, by the corporation and includes, without limitation, corporations, partnerships, limited partnerships, limited liability partnerships, limited liability companies, and/or statutory trusts. Notwithstanding subsection (a) of this section, except to the extent the certificate of incorporation otherwise provides, no vote by stockholders shall be required for a sale, lease, or exchange of property and assets of the corporation to a subsidiary.

(Act 2019-94, §1.)