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Rejected! Common Mistakes on Corporate Merger Filings

ThinkstockPhotos-183177563Our last blog post was about mistakes that are made on common types of corporate filings, resulting in having them kicked back by the Secretary of State. We continue that theme with mistakes that are made on corporate merger documents. Avoid these errors or risk rejection.

You messed up on the corporate merger agreement or officers’ certificate.

  • Including only one, rather than both, of the required officer signatures on the merger agreement for each corporation involved. See Corp C §1102.
  • Including the corporation’s name on, above, or near the officer signature blocks on the officers’ certificate. Officers must sign in their individual capacities, not on behalf of the corporation. Corp C §1102.
  • Submitting a file-stamped copy of the merger document when the surviving corporation is a foreign corporation. The filing in California must be a certified copy of the original document filed in the foreign jurisdiction. Corp C §1108(d).
  • Failing to clearly identify the consideration being paid. If any shares of any constituent corporation won’t be converted solely into shares, interests, or other securities of the surviving party, the merger agreement must specify the consideration being paid for those shares (or that the shares will be cancelled without consideration). Corp C §1101(d).
  • Having an insufficient number of authorized shares to consummate the merger. Remember, the surviving corporation must have enough authorized, but not yet issued or outstanding shares, to accommodate any new shares to be issued in consideration for the merger.

You messed up on the certificate of merger.

  • Submitting a certificate of merger without the required attachments. The certificate of merger must be accompanied by both (i) a copy of the merger agreement and (ii) officers’ certificates for the surviving corporation and for each merging entity. Corp C §§1113(g)(1), 1113(j)(4). See Corp C §1113(g)(2) for the exception to this rule.
  • Filling out items in the certificate of merger that aren’t applicable to the merger.
  • If the merger involves a foreign entity, failing to identify the foreign law authorizing the merger in the certificate of merger. See Corp C §1113(g).
  • Failing to include the proper signatories. The certificate of merger must be executed and acknowledged by both (i) the surviving entity and (ii) each other merging business entity.

For more details on these common merger filing mistakes, check out the featured article Common Reasons the California Secretary of State Rejects Corporate Filings in the July 2015 issue of CEB’s California Business Law Reporter. Also check out CEB’s Sales and Mergers of California Businesses, chap 2.

Other CEBblog™ posts you may find useful:

© The Regents of the University of California, 2015. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

2 Responses

  1. […] merger filings have their own set of mistakes; in our next blog post learn what not to do on merger […]

  2. […] Rejected! Common Mistakes on Corporate Merger Filings […]

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