BILL NUMBER: SB 1186	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Torres

                        FEBRUARY 20, 2014

   An act to amend Section 1101 of the Corporations Code, relating to
corporations.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1186, as introduced, Torres. Merger: conversion of
nonredeemable common shares and equity securities.
    Existing provisions of law provide for the merger of 2 or more
corporations by approval of the board of each corporation of an
agreement of merger. Existing law requires that the agreement contain
the manner of converting the shares of each of the constituent
corporations into shares or other securities of the surviving
corporation, as specified.
   Existing law specifies that the nonredeemable common shares or
nonredeemable equity securities of a constituent corporation may be
converted only into nonredeemable common shares of the surviving
party or a parent party if, prior to the merger, a constituent
corporation or its parent owns, directly or indirectly, shares of
another constituent corporation representing more than 50 percent of
the voting power of the other constituent corporation, unless all of
the shareholders of the class in the first constituent corporation
consent, as specified. Existing law exempts a short-form merger and
the merger of a corporation into a specified subsidiary from this
requirement.
   This bill would repeal the latter exemption. The bill would also
require that the nonredeemable common shares or nonredeemable equity
securities of a constituent corporation be converted only into
nonredeemable common shares of the surviving party or a parent party
if, prior to the execution of the agreement of merger, a constituent
corporation or its parent owns, directly or indirectly, shares of
another constituent corporation representing more than 50 percent of
the voting power of the other constituent corporation, unless the
majority of the holders of outstanding shares of the class in the
first constituent corporation consent, as specified.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 1101 of the Corporations Code is amended to
read:
   1101.   (a)    The board of each corporation
which desires to merge shall approve an agreement of merger. The
constituent corporations shall be parties to the agreement of merger
and other persons, including a parent party (Section 1200), may be
parties to the agreement of merger. The agreement shall state all of
the following: 
   (a) 
    (1)  The terms and conditions of the merger. 
   (b)
    (2)  The amendments, subject to Sections 900 and 907, to
the articles of the surviving corporation to be effected by the
merger, if any. If any amendment changes the name of the surviving
corporation the new name may be the same as or similar to the name of
a disappearing domestic or foreign corporation, subject to
subdivision (b) of Section 201. 
   (c) 
    (3)  The name and place of incorporation of each
constituent corporation and which of the constituent corporations is
the surviving corporation. 
   (d) 
    (4)  The manner of converting the shares of each of the
constituent corporations into shares or other securities of the
surviving corporation and, if any shares of any of the constituent
corporations are not to be converted solely into shares or other
securities of the surviving corporation, the cash, rights,
securities, or other property which the holders of those shares are
to receive in exchange for the shares, which cash, rights,
securities, or other property may be in addition to or in lieu of
shares or other securities of the surviving corporation, or that the
shares are canceled without consideration. 
   (e) 
    (5)  Other details or provisions as are desired, if any,
including, without limitation, a provision for the payment of cash
in lieu of fractional shares or for any other arrangement with
respect thereto consistent with the provisions of Section 407.

   Each 
    (b)    Each  share of the same class
or series of any constituent corporation (other than the cancellation
of shares held by a constituent corporation or its parent or a
wholly owned subsidiary of either in another constituent corporation)
shall, unless all shareholders of the class or series consent and
except as provided in Section 407, be treated equally with respect to
any distribution of cash, rights, securities, or other property.
Notwithstanding  subdivision (d), except in a short-form
merger, and in the merger of a corporation into its subsidiary in
which it owns at least 90 percent of the outstanding shares of each
class,   paragraph (4) of subdivision (a),  the
nonredeemable common shares or nonredeemable equity securities of a
constituent corporation may be converted only into nonredeemable
common shares of the surviving party or a parent party if a
constituent corporation or its parent owns, directly or indirectly,
 prior to the merger  shares of another constituent
corporation representing more than 50 percent of the voting power of
the other constituent corporation prior to the  execution of the
agreement of  merger, unless  all of the shareholders of
the class  consent  is obtained from the holders of at
least a majority of outstanding shares of the class not held by the
first constituent corporation or its parent  and except as
provided in Section 407.