2006 Code of Virginia § 13.1-724 - Shareholder approval of certain dispositions
13.1-724. Shareholder approval of certain dispositions.
A. A sale, lease, exchange or other disposition of the corporation's assets,other than a disposition described in 13.1-723, requires approval of thecorporation's shareholders if the disposition would leave the corporationwithout a significant continuing business activity. Unless the articles ofincorporation or a shareholder-approved bylaw otherwise provide, if acorporation retains a business activity that represented at least 20 percentof total assets at the end of the most recently completed fiscal year, and 20percent of either (i) income from continuing operations before taxes or (ii)revenues from continuing operations for that fiscal year, in each case of thecorporation and any of its subsidiaries that are consolidated for purposes offederal income taxes, the corporation will conclusively be deemed to haveretained a significant continuing business activity.
B. A disposition that requires approval of the shareholders under subsectionA shall be initiated by adoption of a resolution by the board of directorsauthorizing the disposition. After adoption of such a resolution, the boardof directors shall submit the proposed disposition to the shareholders fortheir approval. The board of directors shall also submit to the shareholdersa recommendation that the shareholders approve the proposed disposition,unless the board of directors makes a determination that because of conflictsof interest or other special circumstances it should not make such arecommendation, in which case the board of directors shall transmit to theshareholders the basis for that determination.
C. The board of directors may condition its submission of the proposeddisposition on any basis.
D. If a disposition is required to be approved by shareholders and if theapproval is to be given at a meeting, the corporation shall notify eachshareholder, whether or not entitled to vote, of the proposed shareholders'meeting in accordance with 13.1-658. The notice shall also state that thepurpose, or one of the purposes, of the meeting is to consider thedisposition and shall contain or be accompanied by a copy or summary of theagreement pursuant to which the disposition will be effected. If only asummary of the agreement is sent to shareholders, the corporation also shallsend a copy of the agreement to any shareholder who requests it.
E. Unless the board of directors, acting pursuant to subsection C, requires agreater vote, the disposition to be authorized shall be approved by theholders of more than two-thirds of all the votes entitled to be cast on thedisposition. The articles of incorporation may provide for a greater orlesser vote than that provided for in this subsection or a vote by separatevoting groups so long as the vote provided for is not less than a majority ofall the votes cast on the disposition by each voting group entitled to voteon the disposition at a meeting at which a quorum of the voting group exists.
F. Unless the parties to the disposition have agreed otherwise, after adisposition has been approved by shareholders, and at any time before thedisposition has been consummated, it may be abandoned, subject to anycontractual rights, without further shareholder action in accordance with theprocedure set forth in the resolution proposing the disposition or, if noneis set forth, by the board of directors.
G. A disposition of assets in the course of dissolution under Article 16 (13.1-742 et seq.) is not governed by this section.
H. The assets of a consolidated subsidiary shall be deemed the assets of theparent corporation for the purposes of this section.
I. Notwithstanding any other provision of this section, no corporationorganized to conduct the business of a railroad or other public service or abanking business, or a savings institution, an industrial loan association ora credit union may sell, lease or exchange its properties for the conduct ofsuch business in the Commonwealth except to a corporation of the Commonwealthorganized for the same purpose or in the case of a bank to a savings and loanassociation or a corporation of the United States, and in the case of asavings and loan association to a bank or a corporation of the United States.
(Code 1950, 13-83, 13-84, 13.1-77; 1954, c. 499; 1956, c. 428; 1968, c.109; 1971, Ex. Sess., c. 117; 1975, c. 500; 1985, c. 522; 1987, c. 181; 1996,c. 77; 2005, c. 765.)
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