The Vermont Statutes Online

Title 11A: Vermont Business Corporations

Chapter 012: Sale of Assets

• § 12.01. Sale of assets in regular course of business and mortgage of assets

  (a) A corporation may, on the terms and conditions and for the consideration determined by the board of directors:

  (1) sell, lease, exchange, or otherwise dispose of all, or substantially all, of its property in the usual and regular course of business;

  (2) mortgage, pledge, dedicate to the repayment of indebtedness (whether with or without recourse), or otherwise encumber any or all of its property whether or not in the usual and regular course of business; or

  (3) transfer any or all of its property to a corporation all the shares of which are owned by the corporation.

  (b) Unless the articles of incorporation require it, approval by the shareholders of a transaction described in subsection (a) of this section is not required. (Added 1993, No. 85, § 2, eff. Jan. 1, 1994.)

• § 12.02. Sale of assets other than in regular course of business

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

  (b) For a transaction to be authorized:

  (1) the board of directors must recommend the proposed transaction to the shareholders unless the board of directors determines that because of conflict of interest or other special circumstances it should make no recommendation and communicates the basis for its determination to the shareholders with the submission of the proposed transaction; and

  (2) the shareholders entitled to vote must approve the transaction.

  (c) The board of directors may condition its submission of the proposed transaction on any basis.

  (d) The corporation shall notify each shareholder, whether or not entitled to vote, of the proposed shareholders’ meeting in accordance with section 7.05 of this title. The notice must also state that the purpose, or one of the purposes, of the meeting is to consider the sale, lease, exchange, or other disposition of all, or substantially all, the property of the corporation and contain or be accompanied by a description of the transaction.

  (e) Unless the articles of incorporation or the board of directors (acting pursuant to subsection (c) of this section) require a greater vote or a vote by voting groups, the transaction to be authorized must be approved by a majority of all the votes entitled to be cast on the transaction.

  (f) After a sale, lease, exchange, or other disposition of property is authorized, the transaction may be abandoned (subject to any contractual rights) without further shareholder action.

  (g) A transaction that constitutes a distribution is governed by section 6.40 of this title and not by this section. (Added 1993, No. 85, § 2, eff. Jan. 1, 1994; amended 2007, No. 190 (Adj. Sess.), § 99, eff. June 6, 2008.)