The Vermont Statutes Online

Title 11A : Vermont Business Corporations

Chapter 011 : Conversion, Merger, Share Exchange, and Domestication

• § 11.10. Approval of plan of merger or share exchange

  (a) Subject to section 11.17 of this title and any contractual rights, a constituent organization shall approve a plan of merger or share exchange as follows:

  (1) If the constituent organization is a corporation:

  (A) the board of directors must recommend the plan of merger or share exchange 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 plan; and

  (B) the shareholders entitled to vote must approve the plan.

  (2) If the constituent organization is not a corporation, the plan of merger or share exchange shall be approved in accordance with the organization’s governing statute and organizational documents.

  (b) The board of directors of a constituent corporation may condition its submission of the proposed merger or share exchange on any basis.

  (c) For a constituent organization that is a domestic corporation:

  (1)(A) The constituent organization shall notify each shareholder, whether or not entitled to vote, of the proposed shareholders’ meeting in accordance with section 7.05 of this title.

  (B) The notice shall also state that the purpose, or one of the purposes, of the meeting is to consider the plan of merger or share exchange and contain or be accompanied by a copy or summary of the plan.

  (2) Unless this title, the articles of incorporation, or the board of directors acting pursuant to subsection (b) of this section requires a greater vote or a vote by voting groups, the plan of merger or share exchange must be approved by each voting group entitled to vote separately on the plan by a majority of all the votes entitled to be cast on the plan by that voting group.

  (3) Separate voting by voting groups is required:

  (A) on a plan of merger if the plan contains a provision that, if contained in a proposed amendment to articles of incorporation, would require action by one or more separate voting groups on the proposed amendment under section 10.04 of this title; and

  (B) on a plan of share exchange by each class or series of shares included in the exchange, with each class or series constituting a separate voting group.

  (4) Action by the shareholders of the surviving corporation on a plan of merger is not required if:

  (A) the articles of incorporation of the surviving corporation will not differ, except for amendments enumerated in section 10.02 of this title, from its articles before the merger;

  (B) each shareholder of the surviving corporation whose shares were outstanding immediately before the effective date of the merger will hold the same number of shares, with identical designations, preferences, limitations, and relative rights, immediately after;

  (C) the number of voting shares outstanding immediately after the merger, plus the number of voting shares issuable as a result of the merger, either by the conversion of securities issued pursuant to the merger or the exercise of rights and warrants issued pursuant to the merger, will not exceed by more than 20 percent the total number of voting shares of the surviving corporation outstanding immediately before the merger; and

  (D) the number of participating shares outstanding immediately after the merger, plus the number of participating shares issuable as a result of the merger, either by the conversion of securities issued pursuant to the merger or the exercise of rights and warrants issued pursuant to the merger, will not exceed by more than 20 percent the total number of participating shares outstanding immediately before the merger.

  (5) As used in this subsection:

  (A) “Participating shares” means shares that entitle their holders to participate without limitation in distributions.

  (B) “Voting shares” means shares that entitle their holders to vote unconditionally in elections of directors.

  (d) Subject to section 11.17 of this title and any contractual rights, after a constituent organization approves a merger or share exchange, and before the organization delivers articles of merger or share exchange to the Secretary of State for filing, a constituent organization may amend the plan or abandon the merger or share exchange:

  (1) as provided in the plan; or

  (2) except as otherwise prohibited in the plan, in the same manner it approved the plan. (Added 2015, No. 157 (Adj. Sess.), § E.1, eff. July 1, 2017.)