2021 Colorado Code
Title 7 - Corporations and Associations
Article 111 - Merger, Share Exchange, and Redomestication
§ 7-111-103. Action on Plan - Merger, Conversion, or Exchange - Definitions

1. After adopting a plan of conversion complying with section 7-90-201.3, a plan of merger complying with section 7-90-203.3, or a plan of exchange complying with section 7-90-203.3, the board of directors of the converting corporation, the board of directors of each corporation party to the merger, or the board of directors of each corporation party to the exchange shall submit the plan of conversion, plan of merger, or plan of exchange to its shareholders for approval, except as provided in subsection (7) of this section or in section 7-111-104.
2. For a plan of conversion, a plan of merger, or a plan of exchange to be approved by the shareholders:
   1. The board of directors must recommend the plan of conversion, plan of merger, or plan of 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
   2. The shareholders entitled to vote on the plan of conversion, plan of merger, or plan of exchange must approve the plan as provided in subsection (5) of this section.

3. The board of directors may condition the effectiveness of the plan of conversion, plan of merger, or plan of exchange on any basis.
4. The corporation shall give notice, in accordance with section 7-107-105, to each shareholder entitled to vote on the plan of conversion, plan of merger, or plan of exchange of the shareholders' meeting at which the plan will be voted upon. The notice must state that the purpose, or one of the purposes, of the meeting is to consider the plan of conversion, plan of merger, or plan of exchange, and the notice must contain or be accompanied by a copy of the plan or a summary of the plan.
5. Unless articles 101 to 117 of this title 7, including the provisions of section 7-117-101 (8), the articles of incorporation, bylaws adopted by the shareholders, or the board of directors acting pursuant to subsection (3) of this section require a greater vote, the plan of conversion, plan of merger, or plan of 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.
6. Separate voting by voting groups is required:
   1. On a plan of merger or a plan of conversion if the plan contains a provision that, if contained in an amendment to the articles of incorporation, would require action by one or more separate voting groups on the amendment under section 7-110-104;
   2. On a plan of exchange by each class or series of shares included in the exchange, with each class or series constituting a separate voting group.

7. Action by the shareholders of the surviving corporation on a plan of merger or by the shareholders of the acquiring corporation in a plan of exchange is not required if:
   1. The articles of incorporation of the surviving or acquiring corporation will not differ, except for amendments enumerated in section 7-110-102, from its articles of incorporation before the transaction;
   2. Each shareholder of the surviving or acquiring corporation whose shares were outstanding immediately before the transaction will hold the same number of shares, with identical designations, preferences, limitations, and relative rights, immediately after the transaction;
   3. The number of voting shares outstanding immediately after the transaction, plus the number of voting shares issuable as a result of the transaction either by the conversion of securities issued pursuant to the transaction or by the exercise of rights and warrants issued pursuant to the transaction, will not exceed by more than twenty percent the total number of voting shares of the surviving or acquiring corporation outstanding immediately before the transaction; and
   4. The number of participating shares outstanding immediately after the transaction, plus the number of participating shares issuable as a result of the transaction either by the conversion of securities issued pursuant to the transaction or by the exercise of rights and warrants issued pursuant to the transaction, will not exceed by more than twenty percent the total number of participating shares outstanding immediately before the transaction.

8. As used in subsection (7) of this section:
   1. “Participating shares” means shares that entitle their holders to participate without limitation in distributions.
   2. “Voting shares” means shares that entitle their holders to vote unconditionally in elections of directors.

History. Source: L. 93: Entire article added, p. 802, § 1, effective July 1, 1994. L. 2002: (9) amended, p. 1849, § 118, effective July 1; (9) amended, p. 1714, § 118, effective October 1. L. 2003: (9) amended, p. 2323, § 256, effective July 1, 2004. L. 2006: (9) amended, p. 880, § 72, effective July 1. L. 2007: (1) to (5), (6)(a), and (9) amended, p. 246, § 45, effective May 29. L. 2019: Entire section amended,(SB 19-086), ch. 166, p. 1943, § 50, effective July 1, 2020.

Law reviews. For article, “1959 Amendments to the Colorado Corporation Code”, see 36 Dicta 489 (1959). For article, “The 1985 Proposed Revisions to the Colorado Corporation Code”, see 14 Colo. Law. 34 (1985). For article, “1985 Amendments to the Colorado Corporation Code”, see 14 Colo. Law. 2173 (1985). For article, “Dissenter's Rights in Colorado”, see 18 Colo. Law. 1101 (1989).

Annotator's note. Since § 7-111-103 is similar to § 7-7-103 as it existed prior to the 1993 recodification of the “Colorado Business Corporation Act”, articles 101 to 117 of title 7, cases construing that provision and its predecessors have been included in the annotations to this section.

This section prescribes one of those instances where it is mandatory that all stockholders vote despite restrictions contained in the articles of incorporation. Hampton v. Tri-State Fin. Corp., 30 Colo. App. 420, 495 P.2d 566 (1972).