CORPORATE TRANSACTIONS & COMPLIANCE BLOG

Year End Checklist for Mergers or Consolidations of Delaware Corporations

By: Teri Mayor, COGENCY GLOBAL INC. on Wed, Nov 27, 2019

Year End Delaware Mergers and Consolidations Checklist 2019Yes, it is that time of year again. Merger agreements are being drafted and finalized in preparation of the year’s end, and it is highly likely that one (or all) of the companies will be a Delaware domestic corporation.

A quick refresh on Delaware’s filing guidelines for mergers, acquisitions and consolidations couldn’t hurt as you prepare documents for submission to the Delaware Division of Corporations.

Merger or Consolidation of Domestic Corporations

Your domestic corporation merger or consolidation filing should contain:

  • The names of the corporations.
  • The name of the surviving corporation.
  • Statement that the Agreement of Merger has been approved, adopted, executed and acknowledged by each of the constituent corporations, in accordance with Section 251 of the Delaware Code.
  • Any amendments required to the Certificate of Incorporation for the surviving corporation.
  • If you are filing a consolidation, rather than a merger, attach a Certificate of Incorporation for the new entity being created.
  • If no amendments are effected, a statement that the Certificate of Incorporation of the surviving corporation shall be its Certificate of Incorporation.
  • Statement that the Agreement of Merger is on file at an office of the surviving corporation, along with that office’s address.
  • Statement that a copy of the Agreement of Merger will be provided using this exact language: A copy of the agreement of merger will be furnished by the surviving corporation on request, without cost, to any stockholder of the constituent corporations.
  • Execution by the surviving corporation.

Merger or Consolidation of Domestic and Foreign (Out of State) Corporations

Before submitting filings for a domestic and foreign corporation merger/consolidation, check that you’ve included:

  • The names of the corporations.
  • The states/jurisdictions of incorporation.
  • A statement that the Agreement of Merger has been approved, adopted, certified, executed and acknowledged by each of the constituent corporations, in accordance with Section 252.
  • Name of the surviving corporation and its state of incorporation.
  • If the Delaware corporation will be the survivor, any amendments required to the Certificate of Incorporation for the surviving corporation.
  • If a consolidation is creating a new Delaware corporation, attach a Certificate of Incorporation for that entity.
  • If there are no amendments for a Delaware survivor, include a statement that the Certificate of Incorporation of the surviving corporation will be its Certificate of Incorporation. (You cannot use the Certificate of Incorporation of the non-survivor.)
  • A statement that the Agreement of Merger is on file at an office of the surviving corporation, along with the office’s address, and a statement that the agreement will be provided upon request. 
  • 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 the Secretary of State to accept service of process and provision of a mailing address to which the office can send any process received. 
  • Execution by surviving corporation.

Merger of Parent Corporations and Subsidiary or Subsidiaries

Per Section 253 of the Delaware Code, check that your parent and subsidiary merger filings include:

  • The parent corporation name.
  • The name(s) of the subsidiary corporation(s).
  • The states of incorporation for each corporation.
  • The name of surviving corporation, specifying the state of incorporation if it’s not clear.
  • If the Delaware corporation does not survive, appointment of the Secretary of State to accept service of process and provision of a mailing address to which the office can send any process received. 
  • Attach or set forth a resolution of the parent approving the 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 shareholders of the parent corporation, upon surrender of their share certificates.
  • Execution by parent.
  • If the parent Delaware corporation is not the survivor, a 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’s incorporated.

Merger-Related Delaware Annual Report Requirements

While annual reports for all Delaware corporations are normally due on March 1st, Delaware requires the filing of annual reports and payment of franchise tax when a corporation merges out of Delaware.  

These merger-related annual report requirements are often overlooked and can hold up mergers that need to be completed by the year’s end.   

If a Delaware corporation will not be the survivor in a merger effective on or before December 31st, 2019, the corporation must file their 2019 annual report and pay the associated franchise tax at the time of the merger.

If the merger is effective on or after January 1st, 2020, and the Delaware corporation will not be the survivor, then annual reports and franchise taxes due for both 2019 and 2020 must be filed and paid at the time of the merger. 

Delaware now requires that all annual reports are filed online. These final annual reports can be submitted up to 30 days in advance of the merger filing, as long as the date of filing is in the same calendar year as the merger.  When possible, we recommend filing the annual report prior to the day of the merger filing as it is not uncommon for the annual report filing to create delays.

Delaware Preclearance Service

The above information can be used as a brief but helpful checklist when reviewing your merger documents. Keep in mind that the Delaware Division of Corporations provides a document preclearance service. This service is recommended when working on important, time-sensitive deals that must take place without any obstacles.

Year End Delaware Mergers Checklist Means A Good Nights Sleep_241137431

With the right preparation (and perhaps, assistance), you can enjoy a seamless transaction and a good night’s sleep at an otherwise 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, Delaware Corporate, UCC and Compliance