CORPORATE TRANSACTIONS & COMPLIANCE BLOG

Checklist for End-of-Year Delaware Corporate Mergers or Consolidations

By: Jeanne Carnahan, COGENCY GLOBAL INC. on Mon, Nov 12, 2012

Corporate merger filings in Delaware are as simple as 1-2-3 (or should I say…..Section 251, 252 and 253 of the Delaware Code) when you are familiar with the basic administrative guidelines.   

Yes, it is that time of year again when merger agreements are being drafted and finalized in preparation of year end. And, it is likely that one or all of the companies will be a Delaware domestic corporation. Whether you are working on a merger, acquisition or consolidation, it is beneficial to know the basic guidelines prior to submitting your document to the Delaware Corporations Division. Without this knowledge, your document may be at risk of being suspended. This could interfere with your ability to obtain status certificates in a timely manner to effect the change in states the entity is qualified to do business in.

Here is a checklist that will help you to ensure that your filing contains the basic required information in Delaware:

Section 251 - Merger or Consolidation of Domestic Corporations Delaware Mergers and Consolidations

  • Names of corporations
  • Name of surviving corporation
  • Statement that Agreement of Merger has been approved, adopted, executed and acknowledged by each of the constituent corporations in accordance with Section 251
  • Amendments, if any, to the Certificate of Incorporation of the surviving corporation for a merger or Certificate of Incorporation of the resulting corporation attached for consolidation
  • If no amendments are effected, a statement that the Certificate of Incorporation of the surviving corporation shall be its Certificate of Incorporation
  • Statement that Agreement of Merger is on file at an office of the surviving corporation and state the address thereof
  • Statement that a copy of the Agreement of Merger will be provided
  • Execution by surviving corporation

Please consult with your COGENCY GLOBAL INC. service specialist when an Agreement of Merger or Restated is included in the filing.

Section 252 - Merger or Consolidation of Domestic and Foreign Corporations
(Delaware and Out-of-State Corporation, Certificate of Merger and/or Consolidation)

  • Names of corporations
  • States/jurisdictions of incorporation
  • Statement that Agreement of Merger has been approved, adopted, certified, executed and acknowledged by each of the constituent corporations in accordance with Section 252
  • Name of surviving corporation and state of incorporation
  • If the Delaware corporation survives, amendments, if any, to the Certificate of Incorporation for a merger and the Certificate of Incorporation attached for consolidation, or if no amendments are effected, a statement that the Certificate of Incorporation of the surviving corporation shall be its Certificate of Incorporation (Note that the Certificate of Incorporation of the non-survivor cannot be taken.)
  • Statement that Agreement of Merger is on file at an office of the surviving corporation and state the address thereof
  • Statement that a copy of the Agreement of Merger will be provided 
  • If the Delaware corporation survives, the authorized stock and par value or no par value of each merging non-Delaware corporation
  • If the Delaware corporation does not survive, appointment of Secretary of State to accept service of process and mailing address thereof 
  • Execution by surviving corporation

Please consult with your COGENCY GLOBAL INC. service specialist when filing an Agreement of Merger.

Section 253 - Merger of Parent Corporations and Subsidiary or Subsidiaries 

  • Name of parent corporation
  • Name(s) of subsidiary corporation(s)
  • States of incorporation for each corporation
  • Name of surviving corporation (Specify state of incorporation if not clear)
  • If the Delaware corporation does not survive, appointment of Secretary of State of Delaware to accept service of process and mailing address thereof
  • Attach or set forth resolution of parent approving merger, including date of adoption
  • If the parent is not the surviving corporation, the resolution shall include provisions for the pro rata issuance of stock of the surviving corporation to the holders of the stock of the parent corporation on surrender of any certificates thereof
  • Execution by parent
  • If the parent Delaware corporation is not the survivor, vote of stockholders of the parent corporation is necessary and must be referenced.  If the parent corporation is a non-Delaware corporation and is not the surviving corporation, it should state that it has been approved by the stockholders or approved in accordance with the laws under which it is incorporated.

Important Note About Required Merger-Related Annual Reports
While annual reports are normally due for all Delaware corporations on March 1st, Delaware requires the filing of annual reports and payment of franchise tax when a corporation merges out of Delaware. Therefore, if a Delaware corporation will not be the survivor in a merger that will be effective on or before December 31st, 2012, the corporation must file their 2012 annual report and pay the associated franchise tax at the time of the merger. If the merger is effective on or after January 1, 2013, and the Delaware corporation will not be the survivor, then annual reports and franchise taxes due for both 2012 and 2013 must be filed/paid at the time of the merger. These merger-related annual report requirements are often overlooked and can hold up mergers that need to be completed by year end.  Contact your COGENCY GLOBAL INC. service specialist for assistance when working on a merger that will include a non-surviving Delaware corporation. 

Utilize Delaware Preclearance Service to Avoid Delays and Problems
While the above information can be used as a brief checklist when reviewing your merger document, keep in mind that the Delaware Corporations Division provides a document preclearance service. This service is recommended when working on important, time-sensitive deals that must take place without any obstacles allowing for a seamless transaction and a good night’s sleep at a stressful time of the year.

 

This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.

Topics: Company Formation and Filing Considerations