§ 55-11-03. Action on plan. - North Carolina Statutes

§ 55‑11‑03. Action on plan.

(a)        After adopting aplan of merger or share exchange, the board of directors of each corporationparty to the merger, and the board of directors of the corporation whose shareswill be acquired in the share exchange, shall submit the plan of merger (exceptas provided in subsection (g)) or share exchange for approval by itsshareholders.

(b)        For a plan ofmerger or share exchange to be approved:

(1)        The board ofdirectors must recommend the plan of merger or share exchange to theshareholders, unless the board of directors determines that because of conflictof interest or other special circumstances it should make no recommendation, inwhich event the board of directors must communicate the basis for its lack of arecommendation to the shareholders with the plan; and

(2)        The shareholdersentitled to vote must approve the plan.

(c)        The board ofdirectors may condition its submission of the proposed merger or share exchangeon any basis.

(d)        The corporationshall notify each shareholder, whether or not entitled to vote, of the proposedshareholders' meeting in accordance with G.S. 55‑7‑05. The noticemust state that the purpose, or one of the purposes, of the meeting is toconsider the plan of merger or share exchange and contain or be accompanied bya copy or summary of the plan.

(e)        Unless thisChapter, the articles of incorporation, a bylaw adopted by the shareholders, orthe board of directors (acting pursuant to subsection (c)) require a greatervote, the plan of merger or share exchange to be authorized must be approved byeach voting group entitled to vote separately on the plan by a majority of allthe votes entitled to be cast on the plan by that voting group and, for thepurpose of Article 9 or any provision in the articles of incorporation orbylaws adopted prior to July 1, 1990, a merger shall be deemed to include ashare exchange. If any shareholder of a merging corporation has or will havepersonal liability for any existing or future obligation of the survivingcorporation in the merger solely as a result of owning one or more shares inthe surviving corporation, then, in addition to the requirements of thissubsection, authorization of the plan of merger by the merging corporationshall require the affirmative vote or written consent of that shareholder.

(f)         Separate voting byvoting groups is required:

(1)        On a plan of mergerif the plan contains a provision that, if contained in a proposed amendment toarticles of incorporation, would require action by one or more separate votinggroups on the proposed amendment under G.S. 55‑10‑04, except wherethe consideration to be received in exchange for the shares of that groupconsists solely of cash;

(2)        On a plan of shareexchange by each class or series of shares to be acquired in the exchange, witheach class or series constituting a separate voting group.

(g)        Unless the articlesof incorporation provide otherwise, approval by the surviving corporation'sshareholders of a plan of merger is not required if all of the followingconditions are met:

(1)        Except foramendments permitted by G.S. 55‑10‑02, its articles ofincorporation will not be changed.

(2)        Each shareholder ofthe corporation whose shares were outstanding immediately before the effectivedate of the merger will hold the same shares, with identical preferences,limitations, and relative rights, immediately after the effective date of themerger.

(3)        The number of votingshares outstanding immediately after the merger, plus the number of votingshares issuable as a result of the merger (either by the conversion ofsecurities issued pursuant to the merger or the exercise of rights and warrantsissued pursuant to the merger), will not exceed by more than twenty percent(20%) the total number of voting shares of the surviving corporationoutstanding immediately before the merger.

(4)        The number ofparticipating shares outstanding immediately after the merger, plus the numberof participating shares issuable as a result of the merger (either by theconversion of securities issued pursuant to the merger or the exercise ofrights and warrants issued pursuant to the merger), will not exceed by morethan twenty percent (20%) the total number of participating shares outstandingimmediately before the merger.

(h)        As used in subsection(g):

(1)        "Participatingshares" means shares that entitle their holders to participate withoutlimitation in distributions.

(2)        "Votingshares" means shares that entitle their holders to vote unconditionally inelections of directors.

(i)         After a plan ofmerger or share exchange is authorized, but before the articles of merger orshare exchange become effective, the plan of merger or share exchange (i) maybe amended as provided in the plan of merger or share exchange, or (ii) may beabandoned, subject to any contractual rights, as provided in the plan of mergeror share exchange or, if there is no such provision, as determined by the boardof directors without further shareholder action. (1925, c. 77, s. 1; 1939, c.5; 1943, c. 270; G.S., s. 55‑165; 1955, c. 1371, s. 1; 1959, c. 1316, s.37; 1973, c. 469, s. 33; 1989, c. 265, s. 1; 1989 (Reg. Sess., 1990), c. 1024,s. 12.17; 1993, c. 552, s. 14; 2005‑268, ss. 18, 19, 20.)