Comparative Company Law
Readings 2: Corporate Mobility
Case Law
Katz v. Bregman
Sales of assets amounting to more than half of the total assets
generating about 45% of the net sales of the company no
shareholder vote to approve of the sales
Delaware law requires majority shareholder approval for the sales
of all or substantially all of the assets of a Delaware corporation
(§271(a))
An asset sale of aforementioned magnitude required a shareholder
vote
Reading Materials
Cahn & Donald, ‘Comparative Company Law’
Chapter 21: Techniques for business combinations
Tools and structures for corporate acquisitions
I. Transaction structures and protective tools
Mergers = when two companies form a new, third company
Acquisitions = when one company absorbs another company under
its own name
II. Basic structures for transferring control of corporate assets
Determinant in acquisition is the goal of the acquisition depends
on the way of thinking of the purchaser
A. Purchase of assets
See figure 21.1 on p. 6225 for schematic of a purchase of assets
Allows for obtaining of specific, valuable assets while avoiding
other, less attractive parts of the company
Disadvantage: high transaction costs due to enforceable sales
contracts often, asset purchases may be problematic when a
company is liquidised, because the purchaser can become liable
(avoided by purchase through a subsidiary)
, B. Purchase of stock
See figure 21.2 on p. 6227 for schematic of a purchase of stock
Could be considered a takeover, but when the shareholders are not
dispersed, the purchaser can easily gain control as a majority
shareholder also problems when the purchaser uses securities of
itself as the consideration for the purchase, the transaction might
be regarded as both a takeover and a public ofering of stock
C. Statutory merger
See figure 21.3i on p. 622u for schematic of a statutory merger
Purchaser and the target would agree in their general meetings to
merge upon an exchange of cash or securities at an agreed
exchange ratio, with dissenting shareholders being bought out
can be both forward (where the purchaser is the remnant company)
or reverse (where the target company is the remnant company)
One can use a subsidiary in the whole scheme (see figure 21.4 on p.
623i0) dependent on the needs of the company the merger can be
structured like this creditors prefer this merger form, but there
are other considerations (failing/rich target?)
III. The transaction forms permitted by local law
A. United States
Each structure above is available in the US
asset sale would require a sale and purchase contract sometimes,
a sale of assets following a dissolution may well be treated as a de
facto merger
If it is a registered company with the SEC, a stock exchange has to
comply with the Exchange Act
Mergers and consolidations are allowed under Delaware law
registration with the SEC and type of transaction determines the
procedure statutory merger enters into efect when the approved
merger agreement or a certificate of merger is filed with the
Secretary of State
B. Germany
Readings 2: Corporate Mobility
Case Law
Katz v. Bregman
Sales of assets amounting to more than half of the total assets
generating about 45% of the net sales of the company no
shareholder vote to approve of the sales
Delaware law requires majority shareholder approval for the sales
of all or substantially all of the assets of a Delaware corporation
(§271(a))
An asset sale of aforementioned magnitude required a shareholder
vote
Reading Materials
Cahn & Donald, ‘Comparative Company Law’
Chapter 21: Techniques for business combinations
Tools and structures for corporate acquisitions
I. Transaction structures and protective tools
Mergers = when two companies form a new, third company
Acquisitions = when one company absorbs another company under
its own name
II. Basic structures for transferring control of corporate assets
Determinant in acquisition is the goal of the acquisition depends
on the way of thinking of the purchaser
A. Purchase of assets
See figure 21.1 on p. 6225 for schematic of a purchase of assets
Allows for obtaining of specific, valuable assets while avoiding
other, less attractive parts of the company
Disadvantage: high transaction costs due to enforceable sales
contracts often, asset purchases may be problematic when a
company is liquidised, because the purchaser can become liable
(avoided by purchase through a subsidiary)
, B. Purchase of stock
See figure 21.2 on p. 6227 for schematic of a purchase of stock
Could be considered a takeover, but when the shareholders are not
dispersed, the purchaser can easily gain control as a majority
shareholder also problems when the purchaser uses securities of
itself as the consideration for the purchase, the transaction might
be regarded as both a takeover and a public ofering of stock
C. Statutory merger
See figure 21.3i on p. 622u for schematic of a statutory merger
Purchaser and the target would agree in their general meetings to
merge upon an exchange of cash or securities at an agreed
exchange ratio, with dissenting shareholders being bought out
can be both forward (where the purchaser is the remnant company)
or reverse (where the target company is the remnant company)
One can use a subsidiary in the whole scheme (see figure 21.4 on p.
623i0) dependent on the needs of the company the merger can be
structured like this creditors prefer this merger form, but there
are other considerations (failing/rich target?)
III. The transaction forms permitted by local law
A. United States
Each structure above is available in the US
asset sale would require a sale and purchase contract sometimes,
a sale of assets following a dissolution may well be treated as a de
facto merger
If it is a registered company with the SEC, a stock exchange has to
comply with the Exchange Act
Mergers and consolidations are allowed under Delaware law
registration with the SEC and type of transaction determines the
procedure statutory merger enters into efect when the approved
merger agreement or a certificate of merger is filed with the
Secretary of State
B. Germany
