Merger refers to the situation where one of the constituent corporations remains in being and absorbs into itself the other constituent corporation. It refers to the case where no new corporation is created, but where one of the constituent corporations ceases to exist, being absorbed by the remaining corporation.
Generally, statutes authorizing the combination of corporations prescribe the steps by which consolidation or merger may be effected. The general procedure is that the constituent corporations make a contract setting forth the terms of the merger or consolidation, which is subsequently ratified by the requisite number of stockholders of each corporation.
Minnesota Checklist of Matters that Should be Considered in Drafting a Merger Agreement Introduction: A merger agreement is a critical document that outlines the terms and conditions of a merger between two or more companies. In the state of Minnesota, there are specific matters that should be considered when drafting a merger agreement to ensure legal compliance and protect the interests of all parties involved. This checklist provides a detailed overview of these essential matters. 1. Legal Requirements: — Compliance with Minnesota Business Corporation Act (MBC): The merger agreement must adhere to the provisions outlined in the MBC, which governs the formation and operation of corporations in the state. — Filings with the Minnesota Secretary of State: Ensure that all necessary documents are filed with the Secretary of State as required by law. 2. Merger Structure: — Merger Parties: Clearly identify the merging entities and their respective legal names. — Transaction Type: Determine whether the merger will be a statutory merger, consolidation, or other legally recognized form. — Effective Date: Agree upon a specific date on which the merger will become effective. 3. Consideration and Exchange Ratio: — Stock Exchange Ratio: Specify the terms for the exchange of shares, including the ratio at which the merging companies' stocks will be converted. — Cash Consideration: Determine if any cash will be exchanged as part of the merger agreement and agree upon the specific amounts, if applicable. 4. Allocation of Assets and Liabilities: — Transfer of Assets: Define the assets and liabilities that will be transferred to the surviving company or the newly formed entity, including real estate, intellectual property rights, contracts, and debts. — Assumption of Liabilities: Clearly state which party will assume the liabilities of the merged company, such as outstanding debts, legal obligations, and pending lawsuits. — Indemnification: Establish provisions for indemnification in case of any undisclosed or unknown liabilities. 5. Board and Shareholder Approval: — Board Approval: Specify the requirements for obtaining board approval from each merging company's board of directors. — Shareholder Approval: Determine the conditions and voting thresholds needed to secure shareholder approval for the merger. 6. Termination and Amendments: — Termination: Outline the circumstances under which the merger agreement can be terminated, including the occurrence of specified events, failure to meet conditions precedent, or mutual consent. — Amendments: Specify the procedures to amend or modify the merger agreement and the requisite levels of approval. Additional Types of Minnesota Checklist of Matters for Merger Agreements: 1. Cross-Border Merger Checklist: Provides specific considerations for mergers involving companies located in different states or countries, ensuring compliance with international or federal laws. 2. Tax Considerations Checklist: Focuses on tax implications of the merger and highlights important tax-related matters that must be addressed in the agreement. 3. Employment and Labor Checklist: Addresses issues related to employee contracts, benefits, retrenchments, and any other labor-related matters affected by the merger.
